First Pacific to show all on PLDT sale


PLDT workers have demonstrated against the Gokongwei involvement

By Rufi Vigilar

MANILA, Philippines (CNN) -- In a bid to end a U.S. lawsuit by the Philippines Long Distance Telephone Company (PLDT), Hong Kong-based First Pacific has decided to fully disclose a deal to sell its majority stake in the Philippines' largest telco.

First Pacific said in a statement to CNN Thursday it would submit to U.S. authorities "at the earliest practicable time" its June 4 memorandum of agreement with the Philippines-based Gokongwei group.

In the agreement, the Gokongwei group offered $616.7 million in cash, to be paid over three years, for two-thirds of First Pacific's 24.47 percent stake in PLDT.

First Pacific did not include the agreement in its June disclosure to the U.S. Securities and Exchange Commission and the New York Stock Exchange, where PLDT's depositary shares are listed.

PLDT filed suit before a New York district court in early July, accusing First Pacific of making a "deficient disclosure" and thus violating the U.S. Securities Act of 1934.

'Baseless speculation'


PLDT chairman Antonio Cojuangco has teamed up with CEO Manuel Pangilinan to fight the Gokongwei deal

First Pacific said it would soon disclose the memorandum of agreement to "end baseless speculation about the correctness of First Pacific's originally stated position to PLDT."

"We choose not to continue in this lawsuit simply to argue over the technicalities of disclosing the MOA," the Hong Kong firm said.

First Pacific's executive director and general counsel Ronald A. Brown said that PLDT had used a summary of First Pacific's disclosure with the U.S. Securities Exchange Commission "without mentioning any of the same alleged deficiencies to its shareholders."

The lawsuit was PLDT's first salvo in trying to delay, if not stop, First Pacific's sale of two-thirds of its 24.47 percent stake in the Philippine telco(Full Story).

PLDT president and chief executive officer Manuel Pangilinan, who is also First Pacific's executive chairman, has scrambled to win support from the country's business magnates to challenge the Gokongwei group's bid.

Pangilinan also flew to Tokyo in late June for talks with officials of Japan's Nippon Telegraph and Telephone Co. (NTT).

NTT's 15 percent stake

NTT holds a 15 percent stake in PLDT and has right of first refusal to First Pacific's shares, as well as the power to veto the deal with the Gokongwei group.

PLDT has expressed concern over a possible conflict of interest in the entry of the Gokongwei group, which manages a rival telecom firm, Digital Telecommunications.

PLDT's share price has fallen since the June 4 agreement was made public.

PLDT media services manager Horace Lavides told CNN this "might be seen as the wariness of investors" to the possible entry of the Gokongwei group.

Besides getting NTT's approval, the deal could only go through after due diligence is carried out, which PLDT said it would refuse.

Cojuangco, Pangilinan team up

PLDT chairman Antonio Cojuangco has teamed up with Pangilinan. Cojuangco's family still holds significant shares in Philippine Telecommunications Investment Corporation (PTIC), which holds a 15.4-percent stake in PLDT.

But First Pacific, which holds almost 54 percent of PTIC, is likely to block Cojuangco's exercising a right of first refusal to the Hong Kong firm's PTIC shares if they are put up for sale.

First Pacific said the right only applies if "First Pacific affiliates that acquired the Cojuangco Group's PTIC shares in November 1998 ceased to be affiliates of First Pacific and Mr Pangilinan."

First Pacific has denied that it is negotiating for the sale of P.T. Indofood Sukses Makmur (Indofood), in which the Hong Kong firm owns 49.26 percent.

The Philippines' largest food and beverage group, San Miguel Corporation, has reportedly been eyeing a stake in Indofood as part of its operational expansion in the region.

"First Pacific clarifies that it is not in discussions with any party with regards to a possible disposal of any of its interest in Indofood," First Pacific said.

"Indofood is and will remain a core business of the First Pacific group of companies," the Hong Kong company said.