PSE move to warn public vs investing in Philweb bucked

PSE move to warn public vs investing in Philweb bucked
By Zinnia B. Dela Peña
The Philippine Star 01/30/2006

Philweb Corp. has questioned the Philippine Stock Exchange’s (PSE) move to ask the public to take precaution prior to investing in the listed Internet firm.

The PSE’s move came on the heels of the announcement by Philweb of ePLDT’s planned purchase of 20 percent of the company controlled by former trade minister Roberto Ongpin.

Philweb president Eric Recto said he was surprised at the PSE’s action, noting that the company has not violated any securities law and continues to be in faithful compliance with the disclosure requirements for listed companies.

"The disclosure is very clear. I am a bit curious why the PSE has suddenly taken this position. I’m curious why the PSE called us at 10:30 in the evening Friday asking for additional information on our disclosure and then came out with a statement warning the public without even first hearing out our side," Recto said.

"Had we not disclosed we would then have been investigated. We were very upfront about the proposed deal. It was very clear that it has yet to be negotiated. Don’t they want companies to disclose. I am really curious what this is all about," Recto added.

Based on its disclosure to the PSE last Jan. 25, Philweb said its Board approved ePLDT’s acquisition of 20 percent of the resulting expanded capital of the listed Internet company.

In a statement issued over the weekend, PSE president Francis Lim stressed that nothing is final yet as Philweb has yet to conclude an agreement with ePLDT.

"We welcome investments in our listed companies. The proposed investment appears to be a strategic investment in the growing sector of the economy and that is, of course, very good for the country. But I like to emphasize that the proposed investment is not yet a done deal. And when such a deal is still yet to be negotiated, we hope our investors read the disclosure carefully before making their investment decision," Lim said.

Based on Philweb’s disclosures, three things are clear. "First, ePLDT has not yet made the investments in Philweb. Second, there is still no price for the shares to be subscribed by ePLDT. And third, the parties are still to negotiate the other terms and conditions of the proposed investment," Lim further said.

In the disclosure, Philweb said its management was authorized to negotiate and conclude the agreement with ePLDT with reference to the specific terms and conditions of the investment, including the subscription price of the shares, which will be in conformity with the rules of the PSE.

Upon completion of the proposed transaction, ePLDT will become a significant stockholder of Philweb, entitling it to three seats in the Board of the listed Internet firm.

This is the first time that the exchange has warned the public against a listed company or advised investors to take prudence before investing in a listed corporation.

The PSE normally asks listed companies to provide additional information on the proposed transactions or deals entered into with other companies.

Observers are questioning the PSE’s motive for doing so, given the disclosure made by Philweb is clear and that there was no unsual trading in shares of the listed company.

Shares of Philweb closed at P0.033 Friday, up P0.02 following the announcement that ePLDT will acquire 20 percent of the company PhilWeb provides access, business solutions, e-commerce platforms, distribution services for Internet appliances and software and invests in promising Internet start-up ventures.

The company has proven itself to be the partner of choice for global companies keen on gaining a foothold in the Philippine gaming market with enabling technology partners such as Next Generation, Inc. (NextGen) of Hongkong and Kismet International, USA already on board.