Rizal Commercial Banking Corp. and four other lenders on Tuesday downplayed the impact of their exposure to the multi-million-dollar debt of social networking site Multiply Philippines, which recently sought corporate rehabilitation.
“The total exposure is only 1 percent of RCBC’s assets of P900 billion and less than 2 percent of the P387 billion total net loans,” RCBC said in a disclosure to the stock exchange.
RCBC was responding to a statement by global debt watcher Moody’s Investors Service that the exposure to Multiply’s debt would be credit negative.
Moody’s said of the five Philippine banks that lent money to Multiply, RCBC could be the most affected because it had the largest exposure to Multiply at $600 million.
RCBC said the five lenders had a parent guaranty from Multiply Indonesia, which secures the exposure of Multiply Philippines.
RCBC confirmed that given its exposure to Multiply, its net non-performing loan ratio of 1.2 percent as of September 2013 would increase.
“The bank’s balance sheet, with capital of P84 billion as of September 2013, is in a strong position to absorb these provisions. Even with this default, the bank’s capital adequacy ratio of 17.3 percent as of September 2013 remains very strong, well above the regulatory minimum, and can still support medium-term growth,” RCBC senior vice president and corporate information officer Ma. Christina Alvarez said.
BDO Unibank Inc., the country’s largest lender in terms of assets, said it was not expecting its exposure to Multiply to have a material effect on the bank’s business, operations and/or financial condition.
“The Multiply exposure represents only 0.15 percent of the bank’s total loan portfolio and as such is not considered a material amount,” said BDO, which reportedly had $60-million exposure to Multiply.
Moody’s said in a report that it considered the exposures of BDO, Bank of the Philippine Islands, Land Bank of the Philippines, Metropolitan Bank & Trust Co. and Rizal Commercial Banking Corp. to Multiply be credit negative because it would reduce their profits.
“The exposures are credit negative for the five Philippine banks because they will need to incur additional credit charges related to MPI, which will reduce their profit,” Moody’s said.
BPI said its exposure to Multiply amounted to only $52 million or 0.20 percent of its total loan book.
“We have partially provisioned for this and additional provisions in 2019 is manageable,” BPI said.
All five banks enjoy investment-grade ratings of Baa2 with stable outlooks from Moody’s.
Metrobank, which reportedly had a $72-million loan to Multiply, also belittled the impact of its exposure to the website. “Metrobank’s exposure is low relative to our total assets of P2.1 trillion. We have adequate provisions and we do not see any significant impact to our operations,” Metrobank assistant corporate secretary Laarni Bernabe said in a filing.
State-run Land Bank of the Philippines president and chief executive Alex Buenaventura confirmed that the bank had an $85-million exposure to Multiply.
“We’ll have to address the problem. But the good news is we can recover the assets. The website is worth $5 billion and the total exposure of the creditors is less than $100 billion. Down the road, we hope to recover our exposure,” Buenaventura said.
Finance Secretary Cesar Purisima said the banks’ exposures to Multiply would not significantly affect the banking industry as a whole but the problem needed to be resolved.
“We have to address it. There are assets to be had, and well, this is a difficult problem to be worked through by the banks,” Dominguez said in an interview.
“It’s going to hurt but it’s certainly not going to end up hampering them, but it’s going to hurt... It’s still early days. The banks have agreed to work together and see how we can move forward from here,” he said.
It went closed 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.
At that time, the social networking service 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.
It has 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.
“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.
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.
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 delivers 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.
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.
In a statement, that apart from domestic lenders, Multiply owes some $5 billion to lenders in Argentina, Australia, Bangladesh, Brazil, Brunei, Bulgaria, Cambodia, Canada, China, Colombia, Croatia, Cyprus, Denmark, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Kazakhstan, Japan, Latvia, Laos, Macau, Malaysia, Mongolia, Myanmar, Namibia, Nepal, New Zealand, Pakistan, Paraguay, Peru, Poland, Portugal, Qatar, Russia, Saudi Arabia, Singapore, Slovenia, Slovakia, South Africa, South Korea, Spain, Sri Lanka, Taiwan, Thailand, Ukraine, United Arab Emirates, United Kingdom, United States and Vietnam.
That the site will be reopened after United States President Barack Obama steps down from the office on January 20, 2017 and keeping Facebook as the sole social networking service. 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, Inc.
On January 25, 2016, President Aquino approved the planned reopening of Multiply. The reopening will be undergo 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 their 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, the article in Wikipedia was being vandalized, it was edit is made by a sockpuppet of LPKids2006.
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| Vandalism of a Wikipedia article (Multiply (website). The bottom image shows vandalism done. The top image compares the edit shown below. |
The reopening process of Multiply was commenced in October 2016. As of July 1, 2017, five groups have already showed 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.
Trade Chief Gregory Domingo late in February said either local or foreign groups could take over Multiply. However, he noted it would be better if it were to be a foreign investor as it would reflect confidence in the Philippine economy.
Ports tycoon Enrique Razon showed interest earlier this year to acquire Multiply, but no concrete plans were revealed.
Aside from Razon, Defense Secretary Delfin Lorenzana said companies from the US, Japan, Indonesia, Australia, and Turkey were also eyeing Multiply.
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