Liberty Telecoms violated law anew, says RCBC

Rizal Commercial Banking Corp. (RCBC) said publicly listed Liberty Telecoms Holdings Inc. violated the law anew when it failed to get clearance from the latter’s rehabilitation receiver before entering into several recent corporate transactions.

In a supplement to an earlier motion to terminate rehabilitation proceedings filed with the Makati Regional Trial Court, RCBC said Liberty failed to secure the receiver’s clearance as required by the rehabilitation court when the company amended its articles of incorporation to reclassify around 550 million common shares into voting redeemable and participating shares.

Liberty likewise violated the rehabilitation court’s resolution dated December 2006 when it authorized its board of directors to negotiate and convert its debt into equity, RCBC said in its supplemental motion.

RCBC also scored the company for refusing to identify the investor who will allegedly infuse capital for its rehabilitation as well as the supposed terms of the investment agreement as required by the Interim Rules on Corporate Rehabilitation.

In its reply, Liberty said the transactions need not be cleared with the rehabilitation receiver.

In its rejoinder, RCBC referred to specific provisions of Liberty’s rehabilitation plan where the company committed to identify the investors who would finance Liberty’s rehabilitation within the first 18 months  after the approval of the rehabilitation plan (or up to June 2008).

RCBC also cited another provision of the rehabilitation plan wherein Liberty committed a capital infusion of $40 million starting the seventh month, the second of year  (or July 2008) which Liberty has also failed to comply with.

The bank said Liberty’s supposed rehabilitation failed since the desired targets or goals in the rehabilitation plan were not achieved necessitating the termination of Liberty’s rehabilitation.

Last May 15, RCBC, a creditor of Liberty Telecoms Holdings and its subsidiaries, Liberty Broadcasting Network, Inc. and Skyphone Logistics, filed a motion to terminate the rehabilitation proceedings due to their failure to comply with the terms and conditions of the court-approved rehabilitation plan.

The Liberty companies were placed under rehabilitation by the Makati RTC pursuant to a petition they filed in August 2005.

RCBC claims that Liberty’s rehabilitation plan is no longer feasible because the broadband wireless access (BWA) frequency which the company will use to set up its WiMax project, from which 90 percent of its future revenues will be sourced, has been reassigned by the National Telecommunications Commission (NTC) to Smart Broadband Inc. (SBI).

SBI applied for, and was granted by the NTC a total of 96 MHz under the 700 MHz frequency band where Liberty claims it had an existing frequency assignment for its WIMAX project.

RCBC pointed out that Liberty, despite knowledge of SBI’s application without NTC, did not oppose said application which threatens its frequency assignment under the 700 MHz frequency band.

The bank also pointed out that Liberty did not even inform the rehabilitation court of such threat on its frequency assignment, a matter which it has to explain to the said court.

RCBC claims that instead of addressing the substance of its motion, Liberty merely resorted to technicalities and unfounded insinuations in its counter-motion to expunge RCBC’s motion. Both motions have yet to be resolved by the rehabilitation court. — Mary Ann Reyes