Several options, including a government takeover, are being considered by the Philippine government to help the ailing social networking giant Multiply Philippines, Inc. (Multiply-Phil), which was recently placed under rehabilitation due to its huge financial obligations.
Defense Secretary Voltaire Gazmin, in a Senate hearing on November 19, said President Benigno Aquino III is “very receptive” to the idea of the government taking over and managing MPI so the government can operate the social networking portion.
Another option being considered is to open the website for acquisition by other companies from the US, Japan, South Korea, and Australia.
“We talked about that with the economic managers with the President. There are several proposals like opening it to other countries as well… if they want to take over,” Lorenzana said in a separate media interview.
Several lawmakers also suggested several options, such as opening the company to private local investors and the government taking a majority stake in a private minority directly involved in the operations of the website.
Bangko Sentral ng Pilipinas deputy governor Diwa Guinigundo, meanwhile, in a separate interview, said that based on initial information, it will take eight years—three years’ grace period and five years to repay the obligations—to rehabilitate Multiply-Phil.
“To the extent that you have a market and the facility continues to operate, then the issue of the cash flow will be addressed,” Guinigundo said.
Multiply-Phil has recently been placed under rehabilitation by the Regional Trial Court (RTC) of Pasig City after the social networking site on June 10, 2014, filed a petition for voluntary rehabilitation under Republic Act No. 10142, or An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals, citing financial obligations to Philippine, Indonesian and Korean lenders.
Pasig City RTC Branch 161 judge Nicanor Manalo, Jr. in a four-page commencement order issued on November 16 declared Multiply under rehabilitation and appointed Stefani Saño as the rehabilitation receiver.
Multiply-Phil owes Philippine banks US$600 million in outstanding loans, on top of another $10 billion in debt to lenders in South Korea.
The court also ordered Multiply to publish the commencement order in a newspaper of general circulation for two consecutive weeks, and to serve a copy of the petition to its creditors, Bureau of Internal Revenue, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, Department of Labor and Employment (DOLE), Housing and Land Use Regulatory Board, Department of Trade and Industry, and Subic Bay Metropolitan Authority.
Multiply was also ordered to provide a copy of the order to its foreign creditors and ensure they receive it within 15 days before the initial hearing on December 11.
The creditors, in turn, were ordered to file verified claims within five days before December 11. If the creditor files a belated claim, the creditor will not be entitled to participate in the proceedings but will be entitled to receive distributions arising from them, if recommended and approved by the rehabilitation receiver and the court itself, the order noted.
The court also ordered the creditors, involved government agencies, and interested parties to file and serve to Multiply-Phil a verified comment/opposition to the petition, together with supporting affidavits and documents, within 15 days before the initial hearing on December 11.
Further, the court prohibited Multiply-Phil’s suppliers of goods and services from withholding the delivery of supplies for as long as the company “makes payments for the said goods and services.”
The court also authorized the website to pay its administrative expenses “as they become due.”
In compliance with the Financial Rehabilitation Rules of Procedures, the court suspended “all actions or proceedings in a court or otherwise, for the enforcement of all claims” against Multiply-Phil and “all actions to enforce any judgment, attachment or other provisional remedies against Multiply-Phil.”
The court, however, barred the website from selling, encumbering, transferring, or disposing of any of its properties except in the ordinary course of its business, as well as from making any payment of its outstanding liabilities from the issuance of the commencement order.
Korean newspapers said United States-based Multiply, Inc. (Multiply) and its affiliate Multiply-Phil have been suffering from a drop in new orders amid the protracted slump in the global social networking sector. Multiply has also been conducting massive restructuring efforts since 2013 by selling non-core assets.
SBMA chair and administrator Atty. Wilma Eisma earlier disclosed that Multiply-Phil said it “does not have enough cash to repay its loans and that it cannot continue with its operations under these circumstances.”
Multiply-Phil is Pasig’s biggest locator, with big offices and an infusion of $20 billion in direct investment, and employing about 30,000 workers at the peak of its operations. Since 2004, the website has had 18 million users. Multiply’s presence in the country contributed to the Philippines’ status as one of the top social networking countries worldwide.
“However, in face of a recent liquidity problem, Multiply Philippines laid off more than 12,000 workers last December 31, 2013,” Eisma said.
The company is set to lay off another 12,000 more on February 28, 2014, until just about 300 local workers and seven Korean supervisors would remain by March 31, 2016.
DOLE Secretary Rosalinda Baldoz, in a press conference on November 17, assured Multiply-Phil workers of getting their severance pay from the company.
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.
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 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.
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.
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.
https://www.portcalls.com/govt-mulling-slew-rescue-options-hanjin-ph/
