ABS-CBN is willing to buy back financial instruments said to have allowed indirect foreign ownership in the country’s largest media network, as long as others in the industry are also ordered to do so, the company president told lawmakers.
On their fifth hearing on ABS-CBN’s franchise application, the House committees on franchises and good government zeroed in on the network’s Philippine Depositary Receipts (PDRs), which Anakalusugan Rep. Mike Defensor claimed was a backdoor to foreign ownership.
ABS-CBN brought out counsel Cynthia del Castillo, said to be the pioneer of PDRs in the Philippines, to explain that these were financial instruments were more akin to loans that pay out cash to local and foreign holders, not dividends.
Through PDRs, foreigners, who are barred from owning media entities, can invest in them but without exercising ownership or management rights to underlying shares of stock, which are held by Filipinos.
In the case of ABS-CBN, the PDRs were issued by a different entity, ABS-CBN Holdings, to which shares in the media network were transferred from Lopez Inc. ABS-CBN Holdings and Lopez Inc. are both shareholders in ABS-CBN.
“Ang rights po ng PDR holders are only against ABS-CBN Holdings. And wala po silang rights on ownership or management of a mass media corporation which is ABS-CBN Broadcasting Corp.,” said del Castillo.
Cavite Rep. Jesus Crispin Remulla imputed a conflict of interest on del Castillo, a former Ateneo law dean, by saying she was a hired counsel of ABS-CBN. But del Castillo, who specializes in securities and corporate law, said she had the duty to examine her statements carefully before testifying.
Del Castillo had a hand in the issuance of ABS-CBN rival GMA Network’s PDRs in 2007. ABS-CBN was the first to sell PDRs, a total of 132 million, in 1999.
Fending off accusations that ABS-CBN was being targeted, Defensor said the House would also investigate other PDR issuers.
Katigbak said ABS-CBN was willing to let go of its PDRs if told by the Securities and Exchange Commission (SEC), Congress or the courts.
“We acted in good faith by going to the SEC to secure approval before offering it to the public and at the time the SEC agreed that the instrument was legal,” he said.
“But if the SEC or a court of law or even Congress wishes to disqualify PDRs equally across the entire media industry, then ABS-CBN will be willing to modify, alter or comply with the order if so directed,” he added. (PressONE.ph)