Lopez Holdings Corporation is a holding company invested in leading Philippine corporations: ABS-CBN Corporation (ABS-CBN), the country’s largest multimedia conglomerate and First Philippine Holdings Corporation (FPH), which has investments in sustainable energy development, infrastructure, property development and green manufacturing. Lopez Holdings, ABS-CBN, and FPH are listed in the Philippine Stock Exchange.
The company received a total of ₱942 million in cash dividends from its investees in 2013: ₱179 million from ABS-CBN and ₱763 million from FPH. This compares with ₱865 million in cash dividends received in 2012: ₱357 million from ABS-CBN and ₱508 million from FPH; and ₱1.446 billion in cash dividends received in 2011: ₱938 million from ABSCBN and ₱508 million from FPH.
Lopez Holdings declared a cash dividend of ₱0.125 per share in May 2013, compared to ₱0.10 per share in 2012 and ₱0.10 per share in 2011.
The economic interest of Lopez Holdings in ABSCBN is held through PDRs (Philippine Deposit Receipts) issued by parent firm Lopez Inc., which are convertible into ABS-CBN common shares. Said common shares used to be the underlying security for a Convertible Note issued by Lopez Inc. in April 1998. The Note expired in April 2013 and was replaced by Lopez Inc. PDRs, exchangeable for 446,231,607 ABSCBN common shares.
Through Lopez Inc., the company subscribed to 987,130,246 preferred shares issued by ABS-CBN in February 2013, after a pro-rated offering to existing shareholders in February 2013. ABS-CBN issued one billion preferred shares at par of 0.20 per share, with a cumulative interest rate of 2% per annum.
In addition, the company also subscribed to a new issuance of 34,702,140 ABS-CBN common shares for ₱1.5 billion. The new investment, together with ₱2.5 billion infused by The Capital Group, will be used by ABS-CBN for its digital convergence strategy led by its foray into mobile telephony under the brand ABSCBN Mobile.
Also in 2013, Bayan Telecommunications, Inc. (Bayan), Bayan Telecommunications Holdings Corporation (BTHC) and Globe Telecom, Inc. jointly filed an Amended Rehabilitation Plan with the court having jurisdiction over Bayan’s debts. The court approved the motion that sought to significantly restructure Bayan’s financial debt in order to prevent the recurrence of a default and ensure Bayan’s continued viability. Following Globe Telecom’s tender offer for Bayan’s debt in 2012, Globe Telecom held 96.5% of the total debt of Bayan at the end of that year.
As proposed, restructuring would decrease the outstanding principal debt of Bayan from US$423.3 million to US$131.3 million, through the conversion of up to 69% of Bayan debt into Bayan shares. By converting some of Bayan debt to Bayan equity, Globe owned 38% of Bayan as of end-2013. A change in control of Bayan requires certain regulatory approvals and confirmation by the court. Controlling interest of Lopez Holdings over Bayan through BTHC went down from 86% as of end-2012 to 59% as of end-2013.
Lopez Holdings posted ₱1.943 billion in net income attributable to equity holders of the Parent in 2013. This is 55% lower than the ₱4.294 billion in net income attributable to equity holders of the Parent reported in 2012, as restated. This was primarily due to the absence of one-off gains. Lopez Holdings booked a consolidated gain on sale of investment in equity securities of ₱6.093 billion in 2012 (none in 2013) and a gain on business combination of ₱2.136 billion in 2012 (none in 2013), after subsidiary FPH sold a 2.66% stake (30 million shares) in Meralco in January 2012 and recorded a gain on business combination following the listing by introduction of Rockwell Land Corporation in May 2012. Subsequently, Rockwell Land became a subsidiary of FPH.
Net finance costs decreased by 17% to ₱5.648 billion due to lower debt levels of FPH parent and prepayment of loans at the level of First Gen Corporation and subsidiaries. Equity in net earnings of associates/PDRS and joint ventures (-91%) and other expenses (-134%) fell due to the consolidation of Rockwell Land accounts. Accretion and interest on notes (+8%) represents the stable performance of ABS-CBN, which is currently investing heavily in the digital and mobile platforms.
As of December 31, 2013, the company had US$23 million and 1.167 million in direct obligations, compared to end-2012 debt levels of US$23 million and 67 million.