The Department of Finance (DOF) announced yesterday that the Tan Group had officially informed the government that it intended to exercise its right of first offer at the government-formulated floor price of P43 per share.
Finance Secretary Cesar V. Purisima explained that by exercising his right of first offer and participating in the bidding, the Tan Group also acquires the right to match the highest bid received from third parties when the shares are put on the block for sale.
Purisima said the exercise of its right of first offer was a prerequisite for the Tan Group if it intended to exercise its right to match under the joint sale agreement between the Tan Group and the government.
Should the Tan Group exercise its right to match, Purisima said the Group is required to reimburse the due diligence expenses incurred by the two highest qualified bidders up to a maximum of P25 million each.
The Privatization Council and the Philippine Deposit Insurance Corp (PDIC) had already approved the P43 per share floor price for some 67 percent interest in PNB held jointly by the National Government and the Lucio Tan group.
The price is P3 more than the P40 per share price that Tan paid the government when it took over the bank in 2002.
Purisima said the floor price was based on the valuation made by ING Bank NV, the financial adviser hired by the government for the transaction.
Purisima explained that under the agreement, both parties had agreed to sell at least 67 percent ownership in PNB but Tan had the option to make the first offer.
The floor price, according to the finance chief, also took into account the premium on a block sale since it would allow the investor to have majority stake and control of the bank.
"In the event the winning bidder is interested in purchasing more than the 67 percent minimum ownership, both shareholders may offer to sell additional shares," Purisima said.
The government’s remaining shares in the PNB was estimated to generate between P9 billion and P15 billion for the national coffers.
The Arroyo administration has decided to sell its interests in PNB before September this year, drumming up interests for its holdings in the bank which represents a 45 percent voting right held by the PDIC.
The government and the Tan group had signed a shareholder agreement about five years ago after the P25-billion bail-out plan where PDIC ended up with equity in the bank.
The agreement was scheduled to expire on Sept. 16 this year and Purisima said the target was to be able to auction the government share before the agreement lapses.
Signed by the Tan group and former finance secretary Jose Isidro Camacho, the contract stipulated that the government could exercise the option of initiating a joint sale of up to two-thirds of the combined holdings of the Tan group and the government.
"Since the agreement expires in September, we have evaluated our options to either extend the agreement or sell the holdings," Purisima said.