GMA Network Inc. is buying back its Philippine Depositary Receipts (PDRs) in a pre-emptive attempt to protect its foreign investors.
At a special meeting between GMA Network and the Philippine Stock Exchange, the filed acquisition of PDRs was approved by the Board of Directors.
At P4.55 per share or lower until 31 October of this year. It is about 46.5 percent lower than the issue price of P8.50 per share in 2007.
GMA said the PDR buyback was “a measure of protection of the investments held by non-Filipinos,” after the House Committee on Legislative Franchises slammed the use of the same financial instrument by ABS-CBN.
Fair as it should be, the House of Representatives is now focused on ABS-CBN’s rival network, GMA Network as it investigates the possible infringements of its franchises by broadcasting networks.
According to Cavite Rep. Elpidio Barzaga, he would table a resolution requesting a congressional inquiry into the selling of Philippine Depositary Receipts (PDRs) to foreign investors by GMA Network.
“What is applicable to ABS-CBN should also be applicable to GMA under the equal protection clause – persons similarly situated should be treated alike… The sauce for the goose, should also be sauce for the gander,” said Barzaga.
“It will be unfair to ABS-CBN, which lost its franchise due to the foreign-owned PDRs if we will not investigate all mass media in the country,” he added.
It can be recalled that one of the allegations that caused ABS-CBN for their rejected franchise is the selling of PDRs to foreigners that was cited by the House Committee on Legislative Franchises for refusing to apply for the franchise of the network.
In a 40-page paper, the Technical Working Group established by the Committee claimed that, in violation of the 1987 Constitution, ABS-CBN appears to have used PDRs to permit foreign ownership of the network.
But it was then revealed that that the PDRs provided by the Kapuso and Kapamilya networks were practically the same.
Chairman of the House Committee on Good Government and Public Accounts, Bulacan Rep. Jonathan Sy-Alvarado, confirmed this at one of the ABS-CBN franchise hearings,
“So far only Channel 7 has submitted theirs. I read their PDRs, and the only difference I saw [with ABS-CBN’s] was the price,” Sy-Alvarado said during the June 15 franchise hearing.
Now that GMA Networks got the acquisition, this means that GMA no longer has any PDRs. GMA Network said that once the transaction has been completed, the PDRs will be converted into common shares.
PDRs are an alternative and government-approved tool for businesses in foreign-owned sectors to collect capital from outsiders. International investors earn dividend payments and do not have the right to vote that they have in common stock on a regular basis.