lupuS
Aug 10, 2000, 02:43 PM
Following is the full text of a statement from Templeton Financial Management regarding the recent sale of PNB shares to Lucio Tan.
Eventually, every one of you will become a shareholder. It's only a matter of time.
You are encouraged to read, evaluate, reflect, and make your own judgement about what this means for the investment climate in this country.
-=-=-=-=-=-=-=-=-=-
PHILIPPINES IGNORED SHAREHOLDER RIGHTS IN PNB SALE: TEMPLETON
8/2/0 5:2 (New York)
(The following is a reformatted version of an electronic mail
press release issued by Templeton Investment Management.)
Templeton and Philippine National Bank
Manila, Aug. 2 -- The PNB case demonstrates the Philippine
government disregard for shareholder rights, good corporate
governance, Philippine taxpayer's assets and proper banking
supervision.
Carefully Laid Plan: It now seems that perhaps from the very
start the Philippine Government intended to hand PNB to Lucio Tan
on a silver platter in total disregard to the consequences for the
Philippine Government's ability to obtain a good price and the
violation minority rights. The first stage of the plan was to
allow Tan to surreptitiously obtain a controlling stake by
ignoring enforcement of prevailing disclosure rules. This led to
the second stage a "open" tender for the Government's stage with
the full knowledge that other bidders would be discouraged from
bidding knowing that Tan, in fact, was already in control of the
bank. Consequences? The Philippine Government is forced to sell
the Philippine taxpayer's PNB stake at a very low price thereby
depriving the government budget of badly needed funds. (The recent
fall in the PNB price is window dressing since it allows the
government to say that they received a good price for their
shares.) Minority investors are disadvantaged.
Conflicts of Interest: By allowing Lucio Tan and his
colleagues sit on PNB's board of directors, whose Philippine
Airlines defaulted just two years ago on a Peso 3 billion loan it
owed the bank, the Central Bank has clearly ignored the principles
of good banking supervision. According to a loan review report
prepared by SGV & Co., CPA, dated 30 June 2000, the last monthly
repayment of interest after the loan was restructured was made on
16 August 1999. In other words, the loan was defaulted again last
year.
Government Failed to Keep Its Promise: The Philippine
Government failed in its promise to allow minority investors to
exit at the same price and at the same time as they did. Prior to
the first auction of Government's 30.39% stake in PNB the
Philippine Government in a typical example of double-speak
favorably responded to overtures to sell shares alongside those of
the government and of Lucio Tan. Government's proposal consisted
of combining in a block these shares proportionate to each of the
shareholders' equity holdings in the bank. We sent Undersecretary
Cornelio Gison a written confirmation the following day saying
that we would sell our shares with them and Lucio Tan. But they of
course ignored our acceptance of their offer and proceeded with
their original secret plan to sell the 30% stake to Lucio Tan and
transferred to him the majority control without bringing minority
investors along. Minority shareholders should be entitled to the
same terms and conditions when the controlling shareholders sell
their shares and convey management control to the buyers.
Loida Lewis: Although we applauded her efforts to save PNB,
Templeton never made any agreement with Loida Lewis. We never
accepted to join her consortium at the exclusion of other minority
investors. We rejected her offer to represent us on the Board of
the PNB. We do not have any affiliation with or commitment to Ms.
Lewis or her consortium.
Lack of Transparency: The PNB bidding was a sham. The
government intended to hand the bank to Lucio Tan on a silver
platter and never intended to have a fair bidding. They ignored
Lucio Tan's illicit acquisition of control of the bank. The
presence of Lucio Tan and his colleagues on the board of
directors, the inadequate information on the current statuses of
the non-performing loans including those owned by Tan-affiliated
companies, and the existing banking laws that prohibit a foreign
bank from owning a majority stake in the bank all deterred
legitimate strong investors to make bids. We were greatly
concerned about the lack of transparency surrounding the
acquisition by Mr. Tan of what is a significant interest in the
bank. In his Statement of Beneficial Ownership of Securities (SEC
Form 36-A) dated 2 February 2000 filed with the Securities and
Exchange Commission (SEC), Mr. Tan disclosed to the SEC that his
indirect ownership in the bank consisted of proxy of approximately
46% of the issued and outstanding capital stock of PNB. This
statement was reiterated by PNB Corporate Secretary Atty. Roderick
Salazar III in his testimony before the Committee on Banks of the
Philippine House of Representatives on 15 February 2000 where he
confirmed that in relation to 10 PNB shares which he holds
directly in his name, Mr. Tan likewise holds indirectly by way of
46% of the outstanding capital stock of PNB. However, in his
Amended SEC Form 36-A filed with the SEC on 17 March 2000, Mr. Tan
corrected his earlier disclosure and stated that he in fact holds
proxies for 10.59% of the outstanding capital stock of the bank.
To explain the difference in his two statements, Mr. Tan's
representative advised that the 46% proxies reported in his
earlier statement was made because he believed that proxies which
he anticipated would be issued in his favor may be included among
the PNB shares that he beneficially owned. On the other hand,
during the hearing on 1 February 2000 conducted by the Committee
on Banks, Atty. Linda Daoang, Director of the Money Market
Operations Department of the SEC, disclosed that the SEC had
received a letter dated 8 December 1999 from the PNB Corporate
Secretary advising the SEC that private shareholders led by Mr.
Tan had acquired directly and by proxy approximately 35% of the
total outstanding stock of PNB. . Atty. Daoang further testified
that as of 1 February 2000, Mr. Tan had not yet submitted his SEC
Form 36-A to the SEC. Furthermore, in his testimony on 15 February
2000, Mr. Alberto Reyes, Deputy Governor of the Bangko Sentral ng
Pilipinas (BSP) informed the Committee on Banks that BSP records
show that (1) Mr. Tan holds PNB 10 shares in his name, (2) Mr.
Tan's relatives hold 770 PNB shares, and (3) Mr. Tan's companies
does not own a single share of stock in PNB. However, during the
same hearing, then PNB director Mr. Benjamin Palma-Gil admitted
that Mabuhay Equities, Starline Holdings and Grande Monde
Holdings, firms that are listed among PNB's current stockholders,
are firms allied with Mr. Lucio Tan. On 20 March 2000, Atty.
Estelito Mendoza appeared before the Committee on Banks on behalf
of Mr. Tan and testified before the Committee that Mr. Tan
directly owns 10% of PNB and in addition holds voting proxies over
10.59% of PNB shares executed in his favor by Mabuhay Equities
Corporation, Grande Monde Holdings Corporation and Starline
Holdings Corporation. Atty. Mendoza further argued before the
Committee that 10.59% shares should not be considered as being
owned by Mr. Tan because he only holds voting proxies for those
shares. Subsequently, in a letter dated 26 June 2000 addressed to
Philippine Finance Secretary Jose T. Pardo, Mr. Feliciano Miranda,
President and Chief Executive Officer of PNB, stated that Mr. Tan
represents ownership of about 38.8 percent of current outstanding
PNB stock. On the other hand, it has been widely reported in
several newspapers articles that Mr. Tan claims that
Eventually, every one of you will become a shareholder. It's only a matter of time.
You are encouraged to read, evaluate, reflect, and make your own judgement about what this means for the investment climate in this country.
-=-=-=-=-=-=-=-=-=-
PHILIPPINES IGNORED SHAREHOLDER RIGHTS IN PNB SALE: TEMPLETON
8/2/0 5:2 (New York)
(The following is a reformatted version of an electronic mail
press release issued by Templeton Investment Management.)
Templeton and Philippine National Bank
Manila, Aug. 2 -- The PNB case demonstrates the Philippine
government disregard for shareholder rights, good corporate
governance, Philippine taxpayer's assets and proper banking
supervision.
Carefully Laid Plan: It now seems that perhaps from the very
start the Philippine Government intended to hand PNB to Lucio Tan
on a silver platter in total disregard to the consequences for the
Philippine Government's ability to obtain a good price and the
violation minority rights. The first stage of the plan was to
allow Tan to surreptitiously obtain a controlling stake by
ignoring enforcement of prevailing disclosure rules. This led to
the second stage a "open" tender for the Government's stage with
the full knowledge that other bidders would be discouraged from
bidding knowing that Tan, in fact, was already in control of the
bank. Consequences? The Philippine Government is forced to sell
the Philippine taxpayer's PNB stake at a very low price thereby
depriving the government budget of badly needed funds. (The recent
fall in the PNB price is window dressing since it allows the
government to say that they received a good price for their
shares.) Minority investors are disadvantaged.
Conflicts of Interest: By allowing Lucio Tan and his
colleagues sit on PNB's board of directors, whose Philippine
Airlines defaulted just two years ago on a Peso 3 billion loan it
owed the bank, the Central Bank has clearly ignored the principles
of good banking supervision. According to a loan review report
prepared by SGV & Co., CPA, dated 30 June 2000, the last monthly
repayment of interest after the loan was restructured was made on
16 August 1999. In other words, the loan was defaulted again last
year.
Government Failed to Keep Its Promise: The Philippine
Government failed in its promise to allow minority investors to
exit at the same price and at the same time as they did. Prior to
the first auction of Government's 30.39% stake in PNB the
Philippine Government in a typical example of double-speak
favorably responded to overtures to sell shares alongside those of
the government and of Lucio Tan. Government's proposal consisted
of combining in a block these shares proportionate to each of the
shareholders' equity holdings in the bank. We sent Undersecretary
Cornelio Gison a written confirmation the following day saying
that we would sell our shares with them and Lucio Tan. But they of
course ignored our acceptance of their offer and proceeded with
their original secret plan to sell the 30% stake to Lucio Tan and
transferred to him the majority control without bringing minority
investors along. Minority shareholders should be entitled to the
same terms and conditions when the controlling shareholders sell
their shares and convey management control to the buyers.
Loida Lewis: Although we applauded her efforts to save PNB,
Templeton never made any agreement with Loida Lewis. We never
accepted to join her consortium at the exclusion of other minority
investors. We rejected her offer to represent us on the Board of
the PNB. We do not have any affiliation with or commitment to Ms.
Lewis or her consortium.
Lack of Transparency: The PNB bidding was a sham. The
government intended to hand the bank to Lucio Tan on a silver
platter and never intended to have a fair bidding. They ignored
Lucio Tan's illicit acquisition of control of the bank. The
presence of Lucio Tan and his colleagues on the board of
directors, the inadequate information on the current statuses of
the non-performing loans including those owned by Tan-affiliated
companies, and the existing banking laws that prohibit a foreign
bank from owning a majority stake in the bank all deterred
legitimate strong investors to make bids. We were greatly
concerned about the lack of transparency surrounding the
acquisition by Mr. Tan of what is a significant interest in the
bank. In his Statement of Beneficial Ownership of Securities (SEC
Form 36-A) dated 2 February 2000 filed with the Securities and
Exchange Commission (SEC), Mr. Tan disclosed to the SEC that his
indirect ownership in the bank consisted of proxy of approximately
46% of the issued and outstanding capital stock of PNB. This
statement was reiterated by PNB Corporate Secretary Atty. Roderick
Salazar III in his testimony before the Committee on Banks of the
Philippine House of Representatives on 15 February 2000 where he
confirmed that in relation to 10 PNB shares which he holds
directly in his name, Mr. Tan likewise holds indirectly by way of
46% of the outstanding capital stock of PNB. However, in his
Amended SEC Form 36-A filed with the SEC on 17 March 2000, Mr. Tan
corrected his earlier disclosure and stated that he in fact holds
proxies for 10.59% of the outstanding capital stock of the bank.
To explain the difference in his two statements, Mr. Tan's
representative advised that the 46% proxies reported in his
earlier statement was made because he believed that proxies which
he anticipated would be issued in his favor may be included among
the PNB shares that he beneficially owned. On the other hand,
during the hearing on 1 February 2000 conducted by the Committee
on Banks, Atty. Linda Daoang, Director of the Money Market
Operations Department of the SEC, disclosed that the SEC had
received a letter dated 8 December 1999 from the PNB Corporate
Secretary advising the SEC that private shareholders led by Mr.
Tan had acquired directly and by proxy approximately 35% of the
total outstanding stock of PNB. . Atty. Daoang further testified
that as of 1 February 2000, Mr. Tan had not yet submitted his SEC
Form 36-A to the SEC. Furthermore, in his testimony on 15 February
2000, Mr. Alberto Reyes, Deputy Governor of the Bangko Sentral ng
Pilipinas (BSP) informed the Committee on Banks that BSP records
show that (1) Mr. Tan holds PNB 10 shares in his name, (2) Mr.
Tan's relatives hold 770 PNB shares, and (3) Mr. Tan's companies
does not own a single share of stock in PNB. However, during the
same hearing, then PNB director Mr. Benjamin Palma-Gil admitted
that Mabuhay Equities, Starline Holdings and Grande Monde
Holdings, firms that are listed among PNB's current stockholders,
are firms allied with Mr. Lucio Tan. On 20 March 2000, Atty.
Estelito Mendoza appeared before the Committee on Banks on behalf
of Mr. Tan and testified before the Committee that Mr. Tan
directly owns 10% of PNB and in addition holds voting proxies over
10.59% of PNB shares executed in his favor by Mabuhay Equities
Corporation, Grande Monde Holdings Corporation and Starline
Holdings Corporation. Atty. Mendoza further argued before the
Committee that 10.59% shares should not be considered as being
owned by Mr. Tan because he only holds voting proxies for those
shares. Subsequently, in a letter dated 26 June 2000 addressed to
Philippine Finance Secretary Jose T. Pardo, Mr. Feliciano Miranda,
President and Chief Executive Officer of PNB, stated that Mr. Tan
represents ownership of about 38.8 percent of current outstanding
PNB stock. On the other hand, it has been widely reported in
several newspapers articles that Mr. Tan claims that