SEC says Congress should determine who really controls TV5-ABS-CBN: MVP, Lopez will end up with 49.92 percent stake each under JV deal

The group of bilyonaryo Manny V. Pangilinan and the Lopez family will end up with an identical 49.92 percent stake each in the proposed P4 billion joint venture between TV5 Network and ABS-CBN Broadcasting.

This was revealed by the Securities and Exchange Commission (SEC) as it left it to Congress to determine who will end up controlling the TV-5-ABS-CBN JV.

During a House committee hearing on August 24, SEC general counsel Romuald Padilla said ABS-CBN could increase its stake to as much as 49.92 percent of the JV if it decided to convert into equity the P1.84 billion debt it gave to TV5 after eight years.

The convertible debt note is on top of the P2.16 billion paid by ABS- CBN to purchase 34.99 percent of TV5.

Padilla said the resulting capital structure, after closing and conversion, will make both Pangilinan’s Mediaquest and ABS-CBN’s owners equal partners.

“While the SEC is of the view there is no merger of TV5 and ABS-CBN under the Revised Corporation Code. This matter of controlling interest should be looked into by Congress…SEC will defer to Congress on what constitutes controlling interest,” said Padilla. Padilla said corporate control can be wielded by owning more than 50 percent of a company or appointing majority of the board directors despite owning less than majority.

Congress wants to know if there is a change in control under the TV5-ABS-CBN deal. Under its franchise granted by Congress, TV5 is mandated to get approval from legislators before selling, leasing, transferring or assigning its right to air on free TV frequencies.

Aside from the issue of control, Padilla said the JV deal posed a “potential risk” to TV5 specifically in its compliance to the mandatory sale of at least 30 percent of its stake to the public within five years from the start of its operation.

Padilla said TV5 should explain to Congress where it would get the shares to comply with the minimum public ownership for franchise holders if ABS-CBN opted to fully convert the debt notes. Only .06 percent of TV5’s shares would be available for sale to the public with both partners owning 49.92 percent each.


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