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PLDT files U.S. legal challenge to First Pacific

PLDT staff have demonstrated against the planned tie-up with the Gokongwei group
PLDT staff have demonstrated against the planned tie-up with the Gokongwei group  

By Rufi Vigilar

MANILA, Philippines (CNN) -- Hong Kong-based First Pacific faces a court suit in what could be a long legal battle over its plan to sell a controlling stake in the Philippines' largest telecommunications firm, PLDT.

In a bid to block First Pacific's plan, PLDT sued the firm before a New York district court on Wednesday for alleged violation of U.S. securities law.

PLDT accused First Pacific of failing to fully disclose a $925 million joint venture deal to the U.S. Securities and Exchange Commission and the New York Stock Exchange, where PLDT's American depositary shares are listed.

PLDT said First Pacific had not filed a copy of the June 4 memorandum of agreement it had reached with the Gokongwei group, in its disclosure in the United States.

"This is just one of several violations that First Pacific has made," said Butch Jimenez, PLDT's vice president for media and communications.

'Deficient disclosure'

Jimenez added that First Pacific's "deficient disclosure would deprive PLDT shareholders and the marketplace as a whole of information on the transfer of a significant block of PLDT shares and the shift of corporate control."

Sarah Cheung, First Pacific's assistant vice president for group corporate communications, said the company would not comment until it got a copy of the suit.

First Pacific signed a deal with the Gokongwei group to create a joint venture that would administer the Hong Kong firm's 24.47-percent stake in PLDT.

The Gokongwei group has offered to pay First Pacific $616.7 million in cash over three years, for two-thirds of the disputed stake.

The joint-venture deal not only allows the Gokongwei group to acquire most of First Pacific's stake in PLDT but also the Hong Kong firm's 50.4-percent stake in Bonifacio Land Corporation (BLC).

BLC is a co-developer of 150 hectares of mixed-use property next to Makati, the Philippines' main business district.

NTT crucial's stake

The group of PLDT president and CEO Manuel Pangilinan, who is also First Pacific's executive chairman, has vowed to block any due diligence on PLDT, one of several conditions before the deal could push through.

Another condition is for Japan's NTT to waive its right of first refusal to First Pacific's 24.47-percent stake in PLDT.

NTT, which holds a 15-percent stake in PLDT, could also veto the deal with the Gokongwei group, under a previous agreement with First Pacific.

Pangilinan flew to Tokyo in late June to court NTT into challenging the Gokongwei group's bid.

According to a report in the Asian Wall Street Journal, NTT Communications Corp., the NTT unit which holds the strategic stake, will sell if the price is right.

"NTT has every option, including the sale of the PLDT shares, if the price is high," the newspaper quoted Taketo Suzuki, one of two NTT representatives on the PLDT board, as saying earlier this week.

Pangilinan's group has also cited a possible conflict of interest in the deal, since the Gokongwei group owns Digital Telecommunications (Digitel).

Salim protege

PLDT chairman Antonio Cojuangco is an ally of Pangilinan
PLDT chairman Antonio Cojuangco is an ally of Pangilinan  

Pangilinan, a protege of Sudono Salim (Lim Sioe Liong), the family patriarch who set up First Pacific, oversaw the company's growth in the 1980s until the Asian financial crisis struck in the late 1990s.

Sources said that a falling-out with Salim's son Antony Salim has led to First Pacific's planned divestment of assets in the Philippines.

PLDT chairman Antonio Cojuangco, a Pangilinan ally, is also claiming right of first refusal to the 41-percent stake in the Philippine Telecommunications Investment Corporation (PTIC), which his family sold to First Pacific in 1998.

PTIC holds 15.4 percent of PLDT.

In a press statement, 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."

"The right shall not apply if the First Pacific affiliates are reorganized to become affiliates of, or transfer their PTIC shares to, Mr. Pangilinan and his affiliates," First Pacific said.




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