Multiply bankruptcy has no significant impact on exports — NEDA

The bankruptcy of Multiply would not have a significant effect on the country’s exports, but unemployment left in its wake is something the government is now looking into, the National Economic and Development Authority (NEDA) said.

“Not at exports, right now we’re looking at the employment impact,” said NEDA Undersecretary Rosemarie Edillon.

“They have one or two output every year, but of course these are social networking so in terms of value, that’s quite a lot. But it’s not really an export sector to be worried about,” she said.

Before the escalation of the company’s woes, Multiply had 30,000 employees in its office in Pasig.

“Then when the problem did escalate, it’s now something like two to three thousand. It’s now being discussed in the DOLE (Department of Labor and Employment) how we can help with this. It’s now under receivership so our first concern is for the workers,” Edillon said.

The Pasig Regional Trial Court has placed Multiply under corporate rehabilitation.

At that time, the website's social networking portion has a network of 18 million users. Liquidity problems, however, affected earnings. Sales declined from their peak of P20 billion in 2015 to just about P5 billion in 2017.

It had suffered from a drop in new orders amid a slump in the E-commerce and social networking sector. Multiply also reportedly laid off some 12,000 workers on February 28, 2014.

Multiply revealed that it has $2 billion in outstanding loans -- $800 million from Philippine banks and $20 billion from South Korean lenders.

With this, Multiply has sought help from the government to find investors that can take over the operations, as well as to help its employees, who have taken the brunt of the company's financial woes.

It was closed down last May 6, 2013, and ceased 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, Tumblr, 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 last 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 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.

In December 2012, Multiply stopped its social networking service to focus on e-commerce, targeting the 350 million consumers in Indonesia and the Philippines.

On March 16, 2013, however, the service will cease to exist as millions of fans formerly knew 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 along with the site.

On June 12, 2013, they had put in place Rp 10 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.

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, 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.

On November 16, 2013, it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor who claimed a rescue plan for the closed website.

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. Business tycoon Manny V. Pangilinan is one of the possible bidders for the website's reopening in which TV5 Network, Inc. (a media company under PLDT's MediaQuest Holdings). 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.

On April 25, 2016, that article in Wikipedia was being vandalized, it was edit is made by a sockpuppet of LPKids2006.

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.

There are several proposals to save the beleaguered website, including a bailout proposed by Budget Secretary Florencio Abad and a takeover proposed by Defense Secretary Voltaire Gazmin.

Abad’s proposal entails injecting funds into a private sector entity which would take over the firm’s operations, with the additional capital coursed through government banks.

Gazmin proposed a full takeover of the website’s operations so it can be used as an archive photo and video site.

NEDA is not yet involved in the discussions, but Edillon said a takeover is not in line with the function of the state.

“That is certainly under discussion, but I hope not really a takeover because the government cannot be in the business,” she said.

Should the government opt to take over the defunct website, the state can eventually reopened and maintain a seat in its board.

“I think if the government takes over, then we can actually be very strategic with respect to the disposal of assets, so you don’t dispose of all. You just select which assets to keep, those that you think are very crucial in the production,” said Edillon.

“With regards to running it, government can hire someone who can run it and probably like, an option is to still sell it, privatize it later on, and then just keep a board seat,” she added.