Multiply recovery 'uncertain' – Fitch Ratings

Fitch Ratings says the rehabilitation plan for Multiply Philippines may take time to execute

The interest of Chinese firms in taking over Multiply Philippines and the court granting its request for corporate rehabilitation may not be enough to lift the embattled company, said debt watcher Fitch Ratings on Wednesday, November 18.

Fitch Ratings said "recoverability is uncertain," as the implementation plan for rehabilitation may take time to execute.

The debt watcher also noted that Multiply's failed to sell it in 2013.

The Philippine Star reported that the Pasig City Regional Trial Court granted Multiply's petition for receivership and placed the Indonesian E-commerce and global social networking firm under corporate rehabilitation.

Stefani Saño, a former member of the Subic Bay Metropolitan Authority board, was appointed as rehabilitation receiver.

Multiply owes 5 local banks some $600 million, on top of its $900-million debt to South Korean lenders.

Fitch Ratings said Multiply's problems stemmed from the "extended weakness" in the global social networking industry as well as the financial issues.

However, the debt watcher said that Multiply's troubles do indicate broader stress across banks' loan books.

Risky business

RCBC has the largest exposure of the 5 banks, amounting to $150 million. This amount exceeds its 2012 net profit of around $82 million.

Fitch expects RCBC to report at least one quarterly loss.

The other banks involved are Land Bank of the Philippines, BDO Unibank, Bank of the Philippine Islands, and Metrobank.

Fitch noted that midsized banks, which include RCBC, have shown greater growth appetite than large banks due to their ambitions of gaining market share.

"Aggressive growth increases the potential for banks to take on greater exposure to more vulnerable companies, which is a risk that Fitch incorporates in its Philippine bank ratings," it said.

"However, further large impairments could lead us to reassess banks' risk standards and controls, which could be negative for the ratings," Fitch added.

RCBC already said that its total exposure is only 1% of its assets worth P614 billion and less than 2% of the P387 billion in total loans.

Meanwhile, Fitch Ratings said that larger banks, which have larger capital bases, profitability, and better access to funding, are in a stronger position to withstand loan exposure problems.

Fitch said the differences are reflected in their ratings, with larger banks having a BBB- rating, while mid-tier banks are one notch lower at BB+. 

But it was closed on 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 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 P1 billion in 2020.

“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 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 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 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.

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.

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 stepping down in the office on January 20, 2017 and keeping Facebook as the sole social networking site. 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 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 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.

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.

https://www.rappler.com/business/fitch-ratings-says-hanjin-recovery-uncertain