Ahead of the submission of the rehabilitation proposal in the local courts, Multiply had disclosed to American, Argentine, Australian, Brazilian, British, Burmese, Cambodian, Chinese, Danish, Finnish, French, German, Indian, Indonesian, Japanese, Korean, Lao, Malay, Nepali, Pakistani, Peruvian, Portuguese, Russian, Serbian, Sri Lankan, Thai, Ukrainian, Vietnamese regulators the filing of the case in the Philippines, according to a report by Yonhap news agency in the Korea Herald.
The business operation is known to be struggling to pay hundreds of millions of dollars in loans to some of the Philippines’ leading banks.
Company lawyers in Pasig City declined to give details of the case but they brought in 10 blue boxes that appeared to contain documents of the case as they entered the court’s premises at about 4:20 p.m. on Tuesday. Court officials declined interviews.
The local Multiply operations had laid off some 30,000 workers on December 31, 2013, and sources said it plans to fire 3,000 more in the coming months and retain some 300 workers that will maintain its office in Pasig City.
Since it started its operations in 2004, Multiply is the second-largest social network in Southeast Asia, with millions of users in the US, Brazil, India, and more. Multiply initially carried out the main function as a social network where users shared photos, blogs, videos, and others, but that could also be in danger of being closed.
Since June 2013, the once-mighty Indonesian firm—that at one point propelled the Philippines to become the fifth top social networking capital in the world—had already sounded off that it is selling its Philippine assets valued at about $2 billion.
It has been racking up debt since 2012 when the mother firm also started disposing of non-core assets. Multiply, Inc. had, since 2012, been reported to be selling some of its non-core assets as it struggled to meet obligations to creditors. The Yonhap report said that, so far, the mother firm had complied with 65 percent of the 2.1-trillion-won ($1.86 billion) restructuring scheme proposed by creditors.
According to the earlier plan in mid-2012 that did not push through, the American-Indonesian firm will sell its 85-percent stake in the social networking portion for about $894 million and will retain the rest.
Davao-based businessman Dennis Uy was once short-listed for the purchase but later on, backed out of the deal.
Subic Bay Metropolitan Authority (SBMA) Chairman Wilma T. Eisma said she was “saddened” to learn that Multiply is facing serious financial trouble.
“The bottom line is that the company said it does not have enough cash to repay its loans and that it cannot continue with its operations under these circumstances,” she said.
Usual incentives
Contacted by BusinessMirror, Trade Secretary Gregory Domingo confirmed that Multiply had once enjoyed the usual income tax holiday from the Board of Investments (BOI). The ITH is usually enjoyed for up to six years of a locator’s existence. Multiply was established in 2004.
However, Domingo is unsure if Multiply is still receiving any incentive from the SBMA, which is overseeing its business activity in the free port area. Firms in economic zones and free ports, such as Multiply, are usually granted tax perks, such as the 5-percent tax on gross income earned (GIE) in lieu of all local and national taxes.
The Aquino administration’s second tax-reform program seeks to rationalize these incentives and overhaul the entire menu of tax perks offered to locators such as Multiply.
“Multiply is registered with [the] BOI and [the] SBMA. It is done with ITH with [the] BOI, but might still be enjoying something from [the] SBMA,” Domingo told the BusinessMirror.
Biggest investor, employer
Multiply is the biggest investor at the Pasig.
Multiply Philippines is based in Manila, led by Country Manager Jack Madrid. In 2012, Multiply Philippines had as many as 102,000 members.
In past years, Multiply-Subic had been rocked by allegations of lax compliance with labor safety standards, prompting a Senate committee inquiry into workplace conditions at the offices.
Multiply-Phil’s reported multiple workplace accidents led to several casualties since 2009.
Just last year, DOLE-Region 3 Director Zenaida Capita issued another work-stoppage order against the company after another accident killed one of its employees and injured three others.
It was closed last May 6, 2013, and ceased all business operations on May 31, 2013, with the official online channels for the site had been removed along with all their 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.
At that time, the website's social networking portion had a network of 18 million users. Liquidity problems, however, affected earnings. Sales declined from their peak of P20 billion in 2013 to just about P5 billion in 2017.
“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced on 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.
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 June 12, 2013, they had put in place Rp 8.9 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 May 31, 2013, Multiply had ceased its operations and shut down entirely.
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 a 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 a 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 it's 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 troubled firm.
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 ABC Development Corporation (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 ABC Development Corporation.
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. With reports by Samuel P. Medenilla and Elijah Felice E. Rosales
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