Media giant GMA Network Inc. is buying back all the Philippine Deposit Receipts (PDRs) it had sold to foreigners to defend their investments after lawmakers voted not to renew the franchise of the rival media company ABS-CBN Corp which issued similar financial instruments.
The company disclosed on Tuesday to the stock exchange that the listed media company’s board of directors had approved to “purchase and acquire” the PDRs issued by GMA Holdings, Inc. to foreigners at P4.55 per share or lower “effective immediately and up to Oct. 31, 2020.”
GMA7 said the decision is “a measure of protection of the investments held by non-Filipinos in the PDRs,” which could “be affected by the findings and recommendations of the Technical Working Group as adopted by the House of Representatives Committee on Legislative Franchises on the application for a new franchise of ABS-CBN Corp.”
The PDRs will be converted into common shares after the acquisition. A PDR grants the holder the right to the delivery of sale of the underlying share, according to the Philippine Stock Exchange.
In a document, GMA Holdings said that on July 30, 2007 and Aug. 21, 2007, it issued 822,115,000 and 123,317,000 PDRs relating to GMA shares, respectively. “The total number of issued PDRs is 945,432,000 for a consideration of P8.50 per share or P8,036,172,000.”
In March, GMA Holdings said only 13.02% of its PDRs were held by non-Filipino investors, which went down further to 10.89% in June.
In June, one of the issues raised at the joint hearing of the Committee on Legislative Franchises and the Committee on Good Government and Public Accountability on the application of ABS-CBN for a franchise renewal was whether the media company violated the Constitution when it sold PDRs to foreigners, which allegedly allowed non-Filipinos to own the network.
The 1987 Constitution states that media companies should be 100% Filipino-owned.
GMA Network said in a statement that its issuance of PDRs was “done in compliance with the regulations of the Securities and Exchange Commission and of the Philippine Stock Exchange.”
On Tuesday, shares in GMA Network slipped 0.40% to close at P4.99 apiece.
-StockBytes PH, August 12, 2020.
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