LAWYER Antonio A. Navarro III has a lot of work to do as the new rehabilitation receiver of Primetown Property Group Inc. Having replaced Atty. Rodolfo Romero in the difficult task of putting a financially distressed company back on its feet, he has to follow the rules of the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE), particularly the rule on full disclosure. As a listed company whose shares are trading on the PSE board, Primetown has to be transparent, a rule that requires the disclosure of any corporate act that happens inside the company’s boardroom and any other events or developments that affect the price in the trading of its shares.
And the responsibility of disclosing all this belongs to the management. In the case of Primetown that task now lies on the shoulder of Navarro and, perhaps, also on Gilbert and Kenneth Yap, the two brothers who control the board. Navarro’s first job would be to update the public investors, the SEC and the exchange with the most basic and most important of all filings which are the audited financial statements, which the company has failed to file, a violation of the full disclosure rule. As of matter of fact, Primetown has on file only the ownership of its top 100 stockholders as of June 30, 2010; September 30, 2010; December 31, 2010; and March 31.
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As securities regulator, the SEC has no option but to punish Primetown for continually defying the rule on full disclosure. In an order dated April 29, 2010, lawyer Justina F. Callangan, director of the SEC corporation finance department, noted the following: infractions: non-filing of 2008 annual reports due April 27-30, 2009, first violation; non-filing of 2009 first quarter reports due May 15, 2009; non-filing of 2009 second quarter report due August 14, 2009, second violation; and non-filing of 2009 third quarter report due November 14, 2009. Callangan said: “despite due notice and hearing, the company has failed to submit reports.” For these violations, the SEC suspended the company’s permit to sell securities.
At the same time, it ordered the company to pay a fine of P83,300 for the non-fling of 2008 annual reports and 2009 first and second quarter reports. In addition, it also levied Primetown an additional penalty of P70,000 for not filing its 2009 third-quarter report. Still, the company failed to pay the fines and to submit its 2008 annual and quarterly financial filings for 2009.
As a result, the SEC imposed on Primetown the worst punishment of revocation of the registration of and permit to sell securities, which prohibited the company from “selling/offering for sale its securities to the public.” Translated: The public lost the market for their Primetown shares.
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Incidentally, the public investors, along with Primetown creditors, have to contend with the company’s old financial filings. One posting showed the company had assets of P305.475 million against liabilities of P1.117 billion as of June 30, 2007, more than 10 years after Asia’s financial crisis in 1997. It had authorized capital consisting of 1 billion common shares, of which 865.824 million shares were issued. It also had additional paid-in capital of P908.798 million. The bad news for the public is their company’s accumulated deficit of P2.586 billion. These are the numbers which Primetown should be able to wipe out when it sought the court’s intervention that it be placed under receivership.
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Primetown is one of the more public companies listed on the PSE. It had a public float equivalent to 21 percent of outstanding shares. Last traded on March 4, 2003 when it closed at P0.37, it had a market capitalization of P320.355 million. The list of the top 100 stockholders as of March 31 showed PCD Nominee Corp. with 457.447 million shares, or 52.83 percent. Gilbert and Kenneth Yap then directly held—and still hold—147.370 million shares, or 17.02 percent, and 88.691 million shares, or 10.24 percent, respectively. Another Yap, named Jesse Y., owns 81.50 million shares, or 9.41 percent. In 2007, Kenneth and Gilbert were chairman and vice chairman of the board, respectively, and were among the company’s highest-paid executives. Together with Thelma Rodriguez, they received P435,000 a year from 2005 to 2007. Incidentally, Primetown reported a net loss of P2.583 million and revenues of P262,000 in six months ended June 30, 2007. This financial performance resulted in loss per share of P0.0030, which was worse than the P0.0026 loss per share in the same period in 2006.
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Paging PLDT, Meralco. Manuel V. Pangilinan, chairman of the board of Philippine Long Distance Telephone Co. (PLDT) and Manila Electric Co. (Meralco) does not know what’s happening to the customers of the two public utility companies which his group controls. For his information, PLDT has been billing us for the last two months when our landline—502-02-90—has been out of order. Unfortunately for us, we paid the first bill hoping that our small payment, despite out inability to use the phone, would speed up the repair of our PLDT telephone line. Unfortunately, this did not happen. The same is true with Meralco. The company’s meter reader has only been guessing our electricity consumption for the last two months because of a defective meter. Last month, his reading slightly increased our May’s bill and, to please us, reduced the amount the following month. Again, all we got from Meralco is a promise to replace the meter.
