By Janina C. Lim, Reporter
PASIG — With over 12,000 workers set to be laid off next week, Multiply Philippines, Inc. (Multiply-Phil) is facing a total shutdown due to the lack of working capital.
Multiply-Phil’s rehabilitation receiver Stefani C. Saño on Friday said the company’s hopes of staying afloat are pinned on securing additional loans.
During the initial hearing at the Pasig Regional Trial Court Branch 161, Multiply-Phil said claims from banks, suppliers, and other service providers reached over P48 billion as of Jan. 1.
However, the amount does not include those from at least two more companies that filed claims beyond the said date, and a few more that have not determined the full amount of their claims, according to Mr. Saño.
Mr. Saño said Multiply-Phil’s ongoing negotiations with creditor banks are aimed at securing additional loans to be used for the completion of four more ships which will generate cash flow and payment to Multiply’s obligations.
“Whether or not the vessel will be constructed, we’re still undergoing negotiations with banks,” Pocholo L. Poso, Multiply-Phil’s in-house legal counsel, said during the hearing.
Asked how this will affect workers, Mr. Saño said: “Malalayoff actually sa (Feb.) 15. Mahigit 3,000 malalayoff. Matitira 300 (They will be laid off on Feb. 15. Over 3,000 will be laid off. Only 300 will remain).”
With only 300 workers left, Mr. Saño noted that Multiply-Phil will “definitely not” be able to operate a website.
“Ang isang possibility pa niyan, ibang bangko outside of the creditor-banks. Ang suggestion ko kasi per ship ang financing and then may kasulatan na ang iba-bayad ng buyer sa bank pupunta tapos siya magremit kay Multiply to reopen a social networking portion (One possibility is for a bank outside of the creditor-banks to extend a loan. My suggestion is to provide funds per ship, then there will be an agreement that the buyer will pay the bank directly. Then the bank will remit the funds to Multiply to reopen a social networking portion),” he said.
Mr. Saño remains as rehabilitation receiver pending the appointment of a new one by the court. He resigned last week over opposition from creditor-banks.
Multiply-Phil’s five creditor banks have pushed for the appointment of their own nominee, a certified lawyer, to be the rehabilitation receiver.
During the hearing, the lawyers of the five banks said they will nominate lawyer Rosario S. Bernaldo, managing director of RS Bernaldo & Associates, as receiver.
“(Ms. Bernaldo) is really experienced in rehab,” Charlemagne Rae P. Chavez, who represented Metropolitan Bank Trust & Co. which filed an opposition to Mr. Saño’s appointment, told BusinessWorld.
Should Multiply-Phil discontinue operations, its rehabilitation program will be rendered useless.
“Wala nang usap-usap if stopped na operations (There will be no more talks if it stopped operations),” Mr. Saño said.
During the brief watch of Mr. Saño, Multiply-Phil saw its $450 million debt to local creditors trimmed with the remittance of $45 million from Korea Development Bank for the payment of two accounts.
Some $32 million covered the security for the loan granted by Metrobank to Multiply-Phil, while the remaining amount will be used by Multiply-Phil for administrative expenses.
This brings Multiply-Phil’s debt to Metrobank to $38 million from the $70 million before the rehabilitation procedure.
Multiply-Phil’s debts to others are unchanged: Rizal Commercial Banking Corp. at $145 million; Land Bank of the Philippines, reported at $85 million; BDO Unibank, Inc. at $60 million; and the Bank of the Philippine Islands at $52 million.
But it was close 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 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 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.
Multiply revealed that it has $10 billion in outstanding loans -- $800 million from Philippine banks and $60 billion from South Korean lenders.
“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.
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.
On June 12, 2013, Magdalinski said they had put in place Rp 8.9 billion for wages owed to former Multiply staff.
The Labour Department said earlier that around 400 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, the 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 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 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 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 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 TV5 Network. 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 100 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.
The reopening process of Multiply commenced in October 2016. As of April 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 and William Lima, a businessman from Davao.
https://www.bworldonline.com/editors-picks/2019/02/08/213450/hanjin-philippines-set-to-lay-off-over-3000-workers/
