Thursday, April 22, 2010

Villar steered PSE – Erap (Deals complied with listing rules, NP bet’s camp says)

April 22, 2010, 6:22pm

Original Story:

Former President Joseph “Erap” Estrada definitely saved the best for the last crunch of the campaign period when he exposed Thursday the alleged illegal activities of Nacionalista Party (NP)s standard-bearer Sen. Manuel “Manny” Villar to propel his presidential bid in May 10 elections.

With only two weeks left remaining to campaign, Estrada dared Villar to explain allegations that he “manipulated the Philippine Stock Exchange (PSE) and duped investors” to buy shares of stocks from his company, Vista Land & Lifescapes (VLL), Inc.

But lawyer Nalen Rosero-Galang, chief legal officer for Villar, said the public offering of the shares of stock of Vista Land & Lifescapes was done in compliance with the requirements of the Securities Regulation Code and the rules of the Philippine Stock Exchange.

“I've chosen to break my silence on issues that have bearing not just on this campaign but on the future of our beloved country, especially the poor. I've always believed in pursuing an honorable campaign based on a high level issues and not on mudslinging,” Estrada said in a press conference Thursday.

“That was my firm conviction until I was presented with credible documents involving my rival and his pretensions of being poor, of being pro-poor, and being an honest businessman, I've given Sen. Villar the benefit of the doubt even if he has not given our people convincing explanations on many charges levelled against him,” he added.

“For the enlightenment of Mr. Estrada, the bulk of Vista Land shares, or 85 percent thereof, were taken up by foreign investors. So how can they claim that Filipino investors were duped by Sen. Villar?” Rosero-Galang said.

She added that the said public offering was duly passed upon and cleared by both the SEC and the PSE.

In a press conference, Estrada expressed beliefs that it is his duty as a presidential candidate to expose pieces of evidence, which detailed how Villar used his influence as Senate President “to make billions of pesos from businessmen, who bought shares from VLL.”

He echoed the detailed allegations of Senate President Juan Ponce Enrile, who also disclosed how Villar “bended PSE rules” and “conniving with board members Francis Ed Lim, Anabelle Chua, Roberto Atendido, and Cornelio Peralta to exempt 29.28 percent from the locked-up shares of VLL. Efforts to get the side of the PSE officials proved futile.

The “lock-up” requirement is a standard proscription in all listings and public offerings of shares of stock of private business corporations, prohibiting major shareholders like Villar from selling their own shares with a certain period, Enrile explained.

“In simple terms, those who want to generate funding for their companies by selling their shares to the public are prohibited from selling or dumping their own shares within a certain period, because such will adversely affect the price or value of the listed shares,” Enrile said.

“(This will) unjustly enrich the majority shareholders at the expense of and to the detriment of the public,” he added.

Citing letters in correspondence with PSE Chairman Hans Sicat last March, Enrile said he was able to confirm that Villar met with PSE board members in Tektite Towers in Pasig City to persuade them to bend PSE rules in order to raise a multi-billion pesos, a portion of which had been used up for Villar's campaign for 2010 presidential elections.

“Did Sen. Manny Villar, as has been the talk in business circles, really threaten the PSE with a Senate investigation of the shenanigans of its own members? Was such a threat, no matter how veiled, hidden in the unrecorded caucus?” he asked.

The Senate President, who was almost ousted by Villar in a coup in the Senate last year, said that the presidential bet has generated more or less R26 billion earnings from his private companies from which P5 billion were sold from his “personal shares of stocks.”

Enrile said that after 29.28 percent of locked-up stocks were sold to overseas Filipino workers (OFWs) at listing price of P6.50 per share from the initial public offering of P2.50 per share, its stock price plummeted to only P0.60 per shares.

Enrile also expressed doubts that these multi-billion earnings were not included in Villar's statement of assets and liabilities net worth of P1.041 billion in 2007 and P1.046 billion in 2008.

“If he can do this if he is still not the president, how much more if he is already the president of this country?” he asked.

Villar camp lashes back at Estrada, Enrile

Reacting to the exposé, the Villar’s camp lashed back at Estrada and Enrile for peddling lies and deceiving the public regarding the propriety of the stock offering of his real estate company.

Villar dismissed the claim made by Estrada and Enrile as “pure fiction.”

“Senator Villar is once again being tried publicly via the media by his political opponents. We challenge them to present documents if indeed they have any such credible documents to back their allegations,” said Rosero-Galang.

“We challenge them to file appropriate charges in courts and agencies against the senator and his companies if indeed violations of laws were committed. Until that time, the public should know that this is clearly nothing but political mudslinging.”

Rosero-Galang said the public offering of the shares of stock of Vista Land & Lifescapes was done in compliance with the requirements of the Securities Regulation Code and the rules of the Philippine Stock Exchange.

Both Estrada and Enrile said Villar pressured the PSE board to approve the public offering of the stocks of the company, proceeds of which they claim he used to fund his campaign to the detriment of the company’s Filipino stockholders.

Rosero-Galang said Estrada and Enrile were lying through their teeth.

“For the enlightenment of Mr. Estrada and his Honorable Enrile, the bulk of Vista Land shares, or 85 percent thereof, were taken up by foreign investors. So, how can they claim that Filipino investors were duped by Sen. Villar?” she said.

She added that the said public offering was duly passed upon and cleared by both the SEC and the PSE.

“There was full disclosure of all material information as required by law. There was an Offering Circular, which not only complied with Philippine legal requirements but also conformed to the international standards and practices,” Rosero-Galang explained.

She added that UBS Investment Bank acted as global coordinator and bookrunner of the international offering of the Vista Land shares, while BDO Capital & Investment Corporation acted as Issue Manager and Domestic Lead Underwriter.

She further disclosed that two reputable Philippine law firms – Romulo Mabanta Buenaventura Sayoc & Delos Angeles and Picazo Buyco Tan Fider & Santos – and two reputable international law firms – Allen & Overy and Skadden Arps Slate Meagher & Flom – passed upon the legality of the share offer.

Rosero-Galang also said the pricing of the shares for purposes of the public offer was arrived at through an international bookbuilding exercise that was coordinated by UBS.

“While it is true that Sen. Villar appeared before the PSE Board, there is nothing irregular with the said appearance. PSE listing applicants do that, when deemed necessary to secure the approval of their listing application.

“The PSE is a private corporation, not a government agency. Senator Villar appeared in his private capacity, as a controlling shareholder of an applicant, not as a government official. The lock-up requirement which Vista Land requested the PSE to waive is a requirement under the rules of the PSE, not under any law or regulation. It is well within the power of the PSE to waive any of its rules on just and meritorious grounds. Senator Villar’s appearance was to explain the circumstances which make the request for waiver just and meritorious.

“Most importantly, in the end, the PSE Board did NOT grant the requested waiver despite the appearance of Senator Villar. This shows that the PSE Board was not influenced, much less pressured, by Senator Villar’s appearance before them. The PSE Board allowed the release from escrow of the shares of one corporation because the Board concluded that those shares were not subject to the lock-up requirement. To reiterate, contrary to the allegations of Mr. Estrada, no waiver was granted by the PSE Board,” Rosero-Galang said.

Meanwhile, stock market sources said Vista Land & Lifescapes’ follow-on offering (FOO) overtook two public offerings that were lined up ahead of it but, while there were some grumblings, no one dared raise their voices against the firm owned by the family of Villar.

The offerings that had to give way to the Vista Land FOO were the initial public offerings of GMA Network and the Philippine National Bank (PNB). Vista Land conducted its FOO on July 26, GMA’s IPO was on July 31, and PNB’s FOO on August 2.

PSE President Lim during that time did not return requests for an interview while the PSE has yet to issue a statement as of press time.

On the other hand, PSE Director Vivian Yuchengco said there was “no such thing” as the PSE board being strong-armed into letting Vista Land FOO overtake others.

Sources said Vista Land had wanted to rush its FOO as the market was already at its peak during the stock market’s rally in 2007 and the market was already showing signs of falling from its high and appetite for new share offerings were waning.

Vista not covered by 180-day lock-in period

Vista Land had earlier listed its shares at the PSE by way of introduction of listing without first undertaking an initial public offering on June 25, 2007. Firms that list by way of introduction are mandated to do a public offer of shares 12 months after listing.

Vista Land immediately started the process for its follow-on offering after its listing by way of introduction and soon listed shares from its FOO on July 26, 2007 or just one month after the listing by way of introduction.

Under PSE rules, major shareholders are required to lock in, or not allowed to sell, their shares within 180 days from the listing of shares of the company. However, Vista Land shareholders were able to sell shares in the secondary offering of the FOO since, unlike listings after public offerings, there is no lock-in period required for listing by way of introduction.

Based on PSE rules, listing by way of introduction do not require a 180-day lock-in period on shares. What is covered by the 180-day lock-in period is the case of FOO.

In the case of Vista Land, it complied and in fact extended the lock-in period voluntary through announcement disclosure that they will no longer sell anymore shares.

In its FOO, PSE sources said Vista Land sold a total of P24.75 billion worth of shares consisting of 2.12 billion new shares worth P14.5 billion while its major shareholders, firms controlled by the Villar family, sold 1.49 billion shares to raise P10.2 billion in cash.

Aboitiz Power Corporation raised a total of P11.6 billion from its IPO, GMA and its major shareholders raised P8.9 billion, while PNB raised P5.25 billion from its follow on offering. (With a report from James Loyola)

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