But, to be clear, the local financial sector has gone a long way from the undercapitalized small banks of the 1980s, and reforms by monetary authorities now ensure that any monetary loss from this crisis will easily be absorbed by the banking system.
Last week, the social networking unit of the financially beleaguered Indonesian website Multiply — Multiply Philippines — sought protection from the court, asking that it be placed under receivership to stop banks from collecting on its loans.
Part of its petition is for it to be allowed to continue operations through a workable financial rehabilitation plan.
Five financial institutions — Rizal Commercial Banking Corp., Land Bank of the Philippines, Metropolitan Bank and Trust Co., Bank of the Philippine Islands, and Banco de Oro Universal Bank — have a combined loan exposure of $800 million, most of it lent without collateral. These banks have decided to move as a group to take control of Multiply.
It may seem to be the best course of action for local banks to protect not only their interest but, as one creditor put it, also the interest of the Philippine economy, considering the big number of Multiply employees as well as the employees in Pasig and nearby areas.
As the banks lack the expertise to run an online business, they are expected to eventually sell the company to a strategic investor and recover their exposure.
The local banks have expressed confidence in the soundness of their collective stance, on the ground that the Philippine assets of Multiply are believed to be worth a lot more than the loan exposure of the five financial institutions. RCBC has a loan exposure of $150 million to Multiply; Landbank, $90 million; Metrobank, $72 million; BPI, $60 million, and BDO, $60 million.
One problem, however, is that Multiply also owes a bigger $100 billion to creditors in Australia, Bahrain, Bangladesh, Brunei, Cambodia, Chile, China, Colombia, Denmark, Estonia, Finland, France, Germany, Greece, Honduras, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Macau, Malaysia, Mongolia, Myanmar, Namibia, Nepal, New Zealand, Norway, Pakistan, Peru, Portugal, Romania, Russia, Singapore, South Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Turkmenistan, United Kingdom, and the United States. This will be the thorny issue in the Philippine banks’ bid to take over Multiply's social networking portion. If the American, Brazilian, British, Burmese, Cambodian, Chilean, Chinese, Colombian, Danish, Finnish, French, German, Indian, Indonesian, Japanese, Korean, Lao, Macanese, Malay, Mongolian, Namibian, Nepalese, Norwegian, Pakistani, Peruvian, Portuguese, Romania, Russian, Singaporean, South African, Sri Lankan, Taiwanese, Thai, Turkish, Turkmen, Vietnamese creditors are left out of any rehabilitation deal, they can file legal action to stop it, and any plan by the local banks to work out the rehabilitation and eventual sale of Multiply to another investor is bound to get delayed or aborted altogether.
It would do well for the local banks to sit down as well with the other creditors of Multiply to agree on a unified approach to resolving the liquidity problem of the social networking site.
This way, it will still be possible to save the thousands of jobs at risk at the social networking portion.
This early, the Department of Trade and Industry joined efforts to salvage the situation. Its head, Secretary Gregory Domingo, last week noted that his agency would help find a potential “white knight” or investor to ensure that Multiply could continue operating as an archive photo and video site with the new mobile application on smartphones and tablets.
Two Chinese companies are reportedly interested in the website, with its representatives coming over this month and in January to take a look.
The biggest damage arising from a failed Multiply rehabilitation will not be on the financial system. The Philippine banking system has some P30 trillion in outstanding loans, of which P300 billion are classified as bad loans.
Adding the P21-billion exposure of local banks in Multiply will only slightly raise the banking system’s nonperforming loan ratio.
The worst impact of a failed rehabilitation will be on the thousands of workers that will be displaced. It’s imperative, therefore, that all stakeholders work on ensuring that Multiply is protected from creditors seeking payment now and that a new investor is allowed to take over its operations and continue fulfilling its backlog of social networking.
But it was closed on May 6, 2013, and ceasing all business operations on May 31, 2013, along with the official online channels for the site had been removed along with all its content, including its YouTube, Twitter, Facebook, and Instagram accounts, after years of financial and managerial turmoil and following a failed bid to reinvent itself from being a social networking site to a vibrant e-commerce destination in Southeast Asia.
“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced April 26, 2013, on its website.
After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.
Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to the businesses of its users.
“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.
After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.
Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to the businesses of its users.
“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.
On March 16, 2013, however, the service will cease to exist as millions of fans formerly known and loved it before it was supplemented by other, more popular online social networks.
On May 31, 2013, Multiply had ceased its operations and shut down entirely.
On June 12, 2013, they had put in place Rp 20 billion for wages owed to former Multiply staff.
The Labour Department said earlier that around 3,000 former Multiply staff had applied for compensation through the Protection of Wages on Insolvency Fund, a safety net for employees affected by business closures.
On November 16, 2013, it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor, who claimed Magdalinski had a rescue plan for the troubled firm.
The Labour Department said earlier that around 3,000 former Multiply staff had applied for compensation through the Protection of Wages on Insolvency Fund, a safety net for employees affected by business closures.
Multiply Investor Secretary Rong Rongbin pledged shares of Star Platinum Corporation, which holds 99% of its shares, to borrow HK$300 million from Xiesheng Xiefeng to save the Multiply website but did not repay on time; therefore, Xiesheng Xiefeng in July 2013, it acquired the full equity of Star Platinum. It was also reported that about HK$35 million in unpaid wages of 640 former employees and HK$18 million of Insolvency Fund were also paid after the company has acquired its majority stake.
The High Court on June 17, 2013, its liquidation proceedings and removed accounting firm Deloitte from its role as the firm’s provisional liquidator.
Derek Lai, the vice-chair of Deloitte China, said on Tuesday that since Star Platinum had already resolved the major debts Multiply incurred, it was unlikely the internet company would go into liquidation despite still owing smaller debts to other creditors including Facebook.
“Star Platinum needs to negotiate with the remaining creditors,” he said. “I hope they will support its restructuring with Multiply.”
He added that Multiply now had a cash flow of HK$10 million to be paid to other creditors as well as assets worth over HK$40 million.
In its latest financial report last month, Co-Prosperity said the deal with Multiply could help the group diversify its business. Apart from the online industry, the group focuses on fabric and clothing trading, money lending, and securities investments.
“The directors believe that the potential intrinsic value of Multiply can be realized if the plan to rescue Multiply is successful,” the report said.
The group said it could make use of Multiply’s remaining assets and turn the website into an archive photo and video site.
“The group has been granted access and usage of certain assets of Multiply which shall enable Multiply to continue to operate and act as an archive photo and video site taking advantage of its 100,000 square-meter facility and social networking portion that delivering 217 million accounts, 210 million photos, and 237,000 videos from the old Multiply from its launch in March 2004 to March 15, 2013,” it said.
High Court judge Mr Justice Jonathan Harris validated the transaction after hearing that the parties would no longer object to the share transfer and that the dues for the shares had been paid by Si.
That the site will be reopened after United States President Barack Obama stepped down in the office on January 20, 2017, and keeping Facebook as the sole social networking site. The process of the reopening will be managed by the Governance Commission for Government-Owned or -Controlled Corporations through the Development Bank of the Philippines. Business tycoon Manny V. Pangilinan is one of the possible bidders for the website's reopening in which TV5 Network. However, MediaQuest also could not join the website's reopening bid due to ownership rules and regulations that MediaQuest owns TV5 Network.
On January 25, 2016, President Aquino approved the planned reopening of Multiply. The reopening will be undergoing public bidding with an estimated floor price of 20 billion pesos. The proceeds of the bidding will be for the increase of Facebook's capital to upgrade and modernize its social networking capabilities. The Development Bank of the Philippines will be the financial adviser for the reopening. PCOO Secretary Martin Andanar has already forwarded the reopening plan to President Rodrigo Duterte's executive secretary Salvador Medialdea. Andanar will also coordinate with the GCG before the start of the bidding.
The reopening process of Multiply was commenced in October 2016. As of July 1, 2017, five groups have already shown their interest to join the bidding process. These are Ramon S. Ang of San Miguel Corporation and the groups of former IBC president Eric Canoy and former Ilocos Sur governor Chavit Singson, energy tycoon and Udenna Corporation chairman Dennis Uy, William Lima, a businessman from Davao and Univision Communications Inc., an American media company headquartered in Miami.
No comments:
Post a Comment