Transpacific Broadband seeks funds from foreign investor


Posted at Nov 10 2008 04:44 PM | Updated as of Nov 11 2008 02:27 AM

Listed Transpacific Broadband Group International Inc. (TBGI) is seeking some P222 million in investment from a holding company to be funded by a member of Saudi Arabia's royal family.

TBGI's chair Arsenio Ng and Prince Abdul Aziz Bin Talal Al Saud of Saudi Arabia earlier agreed to set up Arab-Asia Holdings Corp., a company that will serve as the latter's investment vehicle in Asia. Ng, in his personal capacity, will serve as an industrial partner.

Arab-Asia may be organized and registered outside of the Philippines and will be owned by Prince Abdul Aziz Bin Talal Al Saud, with a minority interest belonging to Ng. This means TBGI will have no financial exposure or interest in the new firm.

But TBGI is eyeing an infusion from the new firm in the form of equity and five-year convertible notes.

The company said it is ready to issue shares coming from its authorized but unissued capital stock to the foreign investor. If necessary, it would also increase its current capitalization of 380 million shares to accommodate the new equity without violating the 40 percent constitutional limit on foreign ownership.

While shareholders have no preemptive rights under TBGI's corporate by-laws, the company is working out an arrangement where the convertible note maturities, if exercised, will be pegged at 50 percent premium over market price averaged for 90 trading days.

If the final pricing is less than expected because of poor conditions in the capital market, the company said it will secure an independent opinion on the valuation of the shares.

A definitive investment agreement is expected to be signed in the first semester of 2009.

TBGI said Prince Abdul Aziz bin Talal may assume chairmanship upon signing the agreement with the company. He would then be entitled to a monetary remuneration equivalent to 2 percent of the company's net income with a stock option of five million common shares at par value in the first year, seven million in the second up to the fourth year and 10 million in the years thereafter.

Ng, TBGI chairman and chief executive, would assume the position of president when the prince takes up the chairmanship.

TBGI said it already allocated 35 million shares for issuance to foreign investors via private placement. Investors may purchase a combination of primary shares and up to five percent of secondary shares at a price that is more advantageous to existing shareholders.

TBGI holds a 25-year congressional telecom franchise for commercial telecommunications and television broadcasting operations under Republic Act 8657, which the legislative body passed into law on June 22, 1998.

TBGI owns and operates satellite facilities inside the Clark Special Economic Zone. Its main facility, the Clark Development Corp. Broadcast Operations Center, houses 20 studios for media production and post-production services.