MANILA — ABS-CBN’s telecommunications subsidiary, ABS-CBN Convergence Inc., “never qualified financially,” preventing it from making an initial public offering, the broadcast network’s legal counsel told senators Monday.
Solicitor General Jose Calida cited this failure as one reason ABS-CBN Convergence’s franchise should be revoked.
“Under the stock exchange rules, only companies which qualify under the rules can do an IPO,” ABS-CBN general counsel Mario Bautista told a Senate hearing.
“To put it simply, ABS-CBN Convergence never qualified financially in the offering of the IPO,” he added.
“So in effect, we are being required to perform an act, which we are legally barred from performing with respect to the issuance of the IPO.”
Under the terms of its franchise, the subsidiary was supposed to offer “at least 30 percent of its outstanding capital stock to any securities exchange in the Philippines within 5 years from the start of its operations,” according to Calida’s quo warranto petition filed Feb. 10 at the Supreme Court.
The petition accused ABS-CBN Corp. of employing a “web of corporate layering” to skirt congressional approval when it made use of the franchise of old Multi-Media Telephony Inc., which it had acquired in a merger.
In a previous statement, ABS-CBN said that ownership of the telecommunications subsidiary was “undertaken under the same law and structures that have been utilized by other telecommunications companies.”
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