First Pacific, NTT team up to bid for gov’t’s stake in PLDT

Hong Kong based First Pacific Co. and Japan’s NTT Group have partnered to acquire an additional 6.4-percent stake in Philippine Long Distance Telephone Co. (PLDT) valued at an estimated P26 billion, raising their combined shareholdings to 44 percent and cementing their control of the country’s largest telecommunications company.

This will be done when the combined strength of PLDT’s two largest stakeholders participate in the public auction to be conducted by the Philippine government of its stake in Philippine Telecommunications Investment Corp. (PTIC) which the state acquired after the Supreme Court ordered the reconveyance of shares in PTIC owned by the family of businessman Antonio ‘Tonyboy’ Cojuangco which were condemned as "ill-gotten."

Prime Holdings, the corporate vehicle used by the Cojuangco family in owning 46 percent of PTIC, was a dummy for the late President Marcos, according to the Supreme Court.

First Pacific managing director Manuel Pangilinan earlier told The STAR that it makes sense for them to acquire the remaining stake in PTIC in order to consolidate First Pacific’s ownership in PTIC. First Pacific, through two subsidiaries, currently owns 54 percent of PTIC while government owns the remaining 46 percent.

But according to NTT DoCoMo, it is still planning to acquire additional shares in PLDT. Under an agreement with First Pacific, the NTT Group can own not more than 20 percent of PLDT to ensure First Pacific’s control of PLDT.

The 20-percent ceiling set for the NTT group was included in the cooperation agreement signed by PLDT, DoCoMo, NTT Com and First Pacific last Jan. 31, the same day DoCoMo agreed to buy 12.63 million shares of PLDT from NTT Com for $440 million.

An NTT source earlier told The STAR that the company is interested in the shares held by the Social Security System (SSS) in PLDT, in case government also decides to dispose of it.

First Pacific is proposing to acquire an additional interest in PLDT representing approximately 3.2 percent of PLDT’s issued share capital. Following the proposed acquisition, First Pacific will have an attributable economic interest of approximately 27.5 percent of the telecom giant’s common share capital.

NTT DoCoMo of Japan, which is an existing strategic investor in PLDT owning a 6.7-percent stake, will also acquire shares representing approximately 3.2 percent of PLDT in the same transaction. NTT’s sister company NTT Communications currently owns another 6.7 percent stake in PLDT.

PTIC holds shares representing approximately 13.8 percent of PLDT’s common share capital. The remaining approximate 54 percent of PTIC not owned by the Philippine government is owned by two subsidiaries of First Pacific, who have the benefit under the articles of association of PTIC of a "right to match" the highest bid received in the auction.

Two bids were received by the Philippine government pursuant to the auction process, the highest of which is equivalent to approximately P2,100 ($42.52) per share of PLDT held by PTIC. First Pacific in a statement said this compares to the closing price of a PLDT share on the Philippine Stock Exchange of P2,440 ($49.40) on Dec. 15, 2006.

First Pacific has reached agreement in principle with NTT DoCoMo for the latter to acquire half of the available 6.4-percent stake in PLDT and for First Pacific to acquire the other half.

ATT DoCoMo is a strategic investor in PLDT, currently holding together with NTT Communications Corp. approximately 13.4 percent of PLDT’s common share capital. NTT DoCoMo and First Pacific will each provide 50 percent of the aggregate purchase price for the approximately 6.4 percent interest in PLDT to be acquired by them.

The proposed acquisition, however, can only proceed following the issuance by government of its formal notice pursuant to the right to match. First Pacific anticipates this formal notice will be issued shortly and that the proposed acquisition will be completed within 30 days.

Meanwhile, in a separate statement, NTT DoCoMo said it plans to acquire approximately six million shares of PLDT (3.2 percent of total issued and outstanding shares), which is expected to be equivalent to approximately P13 billion or 30 billion Japanese yen from an affiliate of First Pacific, PLDT’s largest shareholder.