UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Philippine Long Distance Telephone Company
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(Name of Issuer)
Common Capital Stock, 5 Philippine Pesos par value
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(Title of Class of Securities)
Common Capital Stock: 718252109
--------------------------------
(CUSIP Number)
Kazuhiro Yaginuma
NTT Communications Corporation
1-6, Uchisaiwai-cho 1-chome
Chiyoda-ku, Tokyo 100-8019
Japan
(81-3) 6700-4601
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 11, 2002
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this Schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g) check the following box. [ ]
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
CUSIP No. 718252109 13D Page 1
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1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY).
NTT Communications Capital (UK) Limited
No I.R.S. Identification
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |x|
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
England and Wales
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NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY ----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 0
REPORTING ----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
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10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
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14. TYPE OF REPORTING PERSON
CO
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CUSIP No. 718252109 13D Page 2
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1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY).
NTT Communications Corporation
No I.R.S. Identification
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |x|
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY ------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 25,266,973
REPORTING ------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------
10. SHARED DISPOSITIVE POWER
25,266,973
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,266,973
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.0%
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14. TYPE OF REPORTING PERSON
CO
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CUSIP No. 718252109 13D Page 3
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1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (ENTITIES ONLY).
Nippon Telegraph and Telephone Corporation
No I.R.S. Identification
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |x|
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
Not Applicable
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 25,266,973
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
25,266,973
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,266,973
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.0%
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14. TYPE OF REPORTING PERSON
HC
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This Amendment No. 1 (the "Amendment") amends and restates the
Schedule 13D dated March 24, 2000 (the "2000 Schedule 13D"), which was filed
in paper format with the Securities and Exchange Commission (the "SEC") on
behalf of the Reporting Persons (as defined herein) and NTT-UK (as defined
herein), relating to the Common Shares (as defined herein) of Philippine Long
Distance Telephone Company, a corporation organized under the laws of the
Philippines (the "Company" or "PLDT"). The purpose of this Amendment is to
amend Item 2 with respect to the transfer of Common Shares from NTT-UK to
NTTC.
Item 1. Security and Issuer
The title of the class of equity securities to which this Amendment
relates is the common capital stock, par value five Philippine Pesos per
share, of PLDT (the "Common Shares"). The principal executive offices of the
Company are located at the 7th floor, Ramon Cojuangco Building, Makati Avenue,
Makati City, Metro Manila, Philippines.
Item 2. Identity and Background
(a) - (c) and (f)
This Amendment is being filed on behalf of:
o Nippon Telegraph and Telephone Corporation ("NTT"), a corporation
organized under the laws of Japan, has its principal executive
offices at 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, Japan.
NTT's principal business is serving as a holding company for
subsidiaries engaged in providing telecommunications services. These
services fall into seven major classes: telephone services, telegraph
services, leased circuit services, data communication facility
services, Integrated Services Digital Network services, sale of
telecommunication equipment and other services; and
o NTT Communications Corporation, a corporation organized under the
laws of Japan ("NTTC"), has its principal executive offices at 1-6
Uchisaiwai-cho 1-chome, Chiyoda-ku, Tokyo 100-8019, Japan. NTTC is a
wholly-owned direct subsidiary of NTT and its principal business is
providing inter-prefectural telecommunications, multimedia network
services and related services including, providing local, long
distance and other telecommunications services outside of Japan.
NTT and NTTC are hereinafter referred to as the "Reporting Persons."
The name, present principal occupation, business address and
citizenship of each of the directors and executive officers of the Reporting
Persons are set forth on the following schedules to this Amendment:
Schedule A...............Nippon Telegraph and Telephone Corporation
Schedule B...............NTT Communications Corporation
Schedule C...............NTT Communications Capital (UK) Limited
This Amendment contains information with respect to the following
entity, which was a Reporting Person in the 2000 Schedule 13D but is no longer
required to report its beneficial ownership of Common Shares of PLDT as a
result of the transactions described in Item 2: NTT Communications Capital
(UK) Limited ("NTT-UK"), a corporation organized under the laws of England and
Wales and an indirect wholly-owned subsidiary of NTT, has its principal
executive offices at 3rd Floor, Devon House, 58-60 St. Katherine's Way, London
E1 9LB, United Kingdom. NTT-UK is a direct wholly-owned subsidiary of NTTC and
its principal business is acting as an investment holding company.
(d) and (e)
Neither of the Reporting Persons nor, to the best knowledge of each
Reporting Person, any of their directors or executive officers has, during the
last five years, been (a) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (b) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On March 24, 2000, the transactions contemplated by the Stock
Purchase and Strategic Investment Agreement dated as of September 28, 1999, as
amended (the "SMART Purchase Agreement"), among First Pacific Company Limited,
Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific
Resources, Inc. (collectively, the "FPC Group"), the Company and NTTC, were
consummated. Pursuant to the SMART Purchase Agreement NTT-UK acquired:
(a) 13,068,509 newly issued and fully paid Common Shares (the "NTT
PLDT Exchange Shares") in exchange for 1,017,222,294 of common stock of SMART
Communications, Inc. (the "NTT SMART Shares"), a Philippine cellular
telecommunications company ("SMART"), which were held by NTT-UK prior to the
transaction. The NTT PLDT Exchange Shares were issued at an issue price of
1,080 Philippine Pesos per share, or an aggregate issue price of
14,113,989,720 Philippine Pesos.
(b) 12,198,462 newly issued and fully paid Common Shares (the "NTT
PLDT Cash Shares" and together with the NTT PLDT Exchange Shares, the "PLDT
Shares") for a purchase price of 14,662,551,324 Philippine Pesos. All of the
funds used to pay for the NTT PLDT Cash Shares were provided through NTT-UK
from NTTC's available cash resources. In addition, simultaneous with the
closing under the SMART Purchase Agreement, NTT-UK purchased two newly issued
Common Shares, one of which is owned of record by each of the two persons
nominated by NTTC to serve as directors of PLDT.
The aggregate purchase price for the NTT Shares was 28,776,541,044
Philippine Pesos.
For a more detailed summary of the SMART Purchase Agreement, see Item
4 and Item 6. The SMART Purchase Agreement and the First and Second amendments
thereto were filed as Exhibits 2 through 4, respectively, to the 2000 Schedule
13D and are incorporated herein by reference.
On December 11, 2002, pursuant to the terms of an agreement for the
transfer of shares in PLDT, dated December 11, 2002, by and between NTT-UK and
NTTC (the "Transfer Agreement"), NTT-UK transferred the PLDT Shares to NTTC.
As a result of the consummation of the transactions contemplated by the
Transfer Agreement, NTT-UK is no longer the record or beneficial owner of any
Common Shares, and therefore, is no longer required to report its beneficial
ownership of Common Shares of PLDT.
Item 4. Purpose of Transaction
The Reporting Persons acquired beneficial ownership of the PLDT
Shares with a view to (i) establishing a strategic relationship to, among
other things, explore the development and marketing of products and services
and (ii) attaining an equity interest in PLDT and influence over the
management and policies of PLDT, including representation on PLDT's board of
directors, that is at least commensurate with their aggregate direct and
indirect interest in PLDT from time to time. The Reporting Persons have not
yet made a determination as to the specific level of beneficial ownership they
will seek to obtain, but as a result of the SMART Transaction (as defined
herein) described in this Item 4 and in Item 6, the Reporting Persons as of
the date hereof control approximately 15.0% of the voting power attached to
the outstanding Common Shares.
Pursuant to the SMART Purchase Agreement, PLDT acquired all of the
shares of SMART owned by the FPC Group and NTT-UK in exchange for newly issued
and fully paid Common Shares (the "SMART Acquisition"). PLDT also acquired the
shares of the existing minority shareholders in SMART in exchange for newly
issued and fully paid Common Shares in connection with the SMART Acquisition.
A copy of the SMART Purchase Agreement was filed as Exhibit 2 to the 2000
Schedule 13D, and any description contained in this Amendment relating to the
SMART Purchase Agreement does not purport to be complete and is qualified in
its entirety by reference to the SMART Purchase Agreement and the amendments
thereto filed as Exhibits 2 through 4 to the 2000 Schedule 13D.
Pursuant to the SMART Purchase Agreement, inter alia:
o PLDT acquired from the members of the FPC Group 1,597,814,621
SMART shares representing approximately 56% of the issued common capital stock
of SMART in exchange for the issuance to members of the FPC Group 20,527,524
newly issued and fully paid Common Shares at a price of 1,080 Philippine Pesos
per Common Share, or an aggregate issue price of 22,169,725,920 Philippine
Pesos;
o PLDT acquired from NTT-UK 1,017,222,294 SMART shares representing
approximately 37% of the issued common capital stock of SMART, in exchange for
the issue to NTT-UK of 13,068,509 newly issued and fully paid Common Shares at
a price of 1,080 Philippine Pesos per Common Share, or an aggregate issue
price of 14,113,989,720 Philippine Pesos; and
o NTT-UK subscribed for an additional 12,198,462 NTT PLDT Cash
Shares, which were issued to NTT-UK for an aggregate price of 14,662,551,324
Philippine Pesos in cash, or 1,202 Philippine Pesos per Common Share (the "NTT
Investment" and, together with the SMART Acquisition, the "SMART
Transaction").
In connection with the consummation of the SMART Transaction, NTTC
and PLDT established a strategic relationship to, among other things,
coordinate the development and marketing of telecommunications products and
services. As part of this strategic relationship, (i) NTTC and its
subsidiaries (the "NTT Group") are restricted in making investments in
businesses that compete with PLDT; (ii) NTTC has certain approval rights over
expenditures and investments made by PLDT as well as approval rights over
actions PLDT takes with respect to Pilipino Telephone Corporation ("Piltel"),
a majority-owned, publicly-traded subsidiary of PLDT and (iii) NTTC has
certain rights in the event PLDT proposes (with certain exceptions) to issue
additional Common Shares or securities convertible into or exchangeable for
Common Shares.
For a more detailed summary of the SMART Purchase Agreement, see "The
SMART Purchase Agreement" under Item 6.
The consummation of the SMART Transaction resulted in the following:
(a) SMART becoming a wholly-owned subsidiary of PLDT, (b) the FPC Group
controlling voting rights attaching at that time approximately 31.4% of the
outstanding Common Shares, (c) NTT-UK becoming the registered and beneficial
owner of 25,266,973 Common Shares, representing approximately 15.0% of the
outstanding Common Shares and (d) NTTC having the right to nominate: (i) two
directors to the board of directors of PLDT, which was recently enlarged from
eleven to thirteen members, (ii) two directors to the board of directors of
SMART and (iii) one director to serve as a member of each of the boards of
directors of the other subsidiaries of PLDT. For a more detailed summary of
NTTC's rights to nominate directors to the board of directors of PLDT and its
subsidiaries, see "The Shareholders Agreement" under Item 6.
In connection with the SMART Purchase Agreement, the FPC Group,
Larouge B.V., Metro Pacific Assets Holdings, Inc. (collectively, the "FPC
Parties") and NTTC entered into a shareholders agreement as to certain
corporate governance and other matters among those parties as shareholders of
PLDT (the "Shareholders Agreement"). A copy of the Shareholders Agreement was
filed as Exhibit 5 to the 2000 Schedule 13D, and any description contained in
this Amendment relating to the Shareholders Agreement does not purport to be
complete and is qualified in its entirety by reference to the Shareholders
Agreement filed as Exhibit 5 to the 2000 Schedule 13D. For a more detailed
summary of the Shareholders Agreement, see "The Shareholders Agreement" under
Item 6.
PLDT also entered into registration rights agreements with NTTC and
the FPC Group with respect to their Common Shares. (The registration rights
agreement between PLDT and NTTC is hereinafter referred to as the
"Registration Rights Agreement.") A copy of the Registration Rights Agreement
was filed as Exhibit 6 to the 2000 Schedule 13D, and any description contained
in this Statement relating to the Registration Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Registration Rights Agreement filed as Exhibit 6 to the 2000 Schedule 13D. For
a more detailed summary of the Registration Rights Agreement, see "The
Registration Rights Agreement" under Item 6.
NTTC (or certain of its subsidiaries) and PLDT also entered into
certain agreements (the "Commercial Agreements") as to certain commercial and
technical matters relating to PLDT's ongoing operations and as to certain
advisory arrangements with respect to such Commercial Agreements (the
"Services Agreements"). For a brief summary of these agreements, see "The NTT
Commercial Agreements" under Item 6.
NTT-UK transferred the Common Shares to NTTC as part of a
reorganization of NTTC's holdings.
The Reporting Persons may acquire beneficial ownership of additional
Common Shares through purchases, from time to time, in the open market at
prices prevailing in the market at the time of such purchases or through
privately negotiated transactions for the purchase of such shares at prices
deemed favorable by such Reporting Persons (that may or may not be related to
prices of the Common Shares or American Depositary Shares (CUSIP No.
718252604) prevailing in the open market) or by means of an offer, tender,
exchange and/or otherwise, to purchase all or a portion of the securities of
PLDT. Subject to the restrictions on disposals of those shares in the SMART
Purchase Agreement and the Shareholders Agreement, as described under Item 6,
each of the Reporting Persons reserves all of its rights in regard to its
beneficial ownership of Common Shares, including the right to dispose of some
or all of its beneficial ownership of Common Shares, whether in a single
transaction or a series of related transactions, in the open market, in
privately negotiated transactions or otherwise.
In reaching any conclusion as to the foregoing, the Reporting Persons
may take into consideration various factors, including, without limitation,
(i) actions taken by PLDT, PLDT's board of directors, management or its
principal shareholders (including the members of the FPC Group); (ii) PLDT's
business, results of operations, prospects and financial condition; (iii)
available sources of financing for additional purchases of Common Shares; (iv)
the market for PLDT's securities; (v) other opportunities available to the
Reporting Persons; (vi) general economic, financial and stock market
conditions; and (vii) other further developments.
Item 5. Interest in Securities of the Issuer
(a) As of April 12, 2002, the Reporting Persons beneficially owned
25,266,973 Common Shares, representing approximately 15.0% of the total number
of Common Shares outstanding.
(b) As the registered owner, NTTC has the power to directly vote or
dispose of the 25,266,973 Common Shares beneficially owned by the Reporting
Persons. By virtue of its ownership of all of the issued and outstanding
capital stock of NTTC, NTT has the power to direct the voting or disposition
of the Common Shares beneficially owned by the Reporting Persons.
(c) Except for the sale and purchase of Common Shares pursuant to the
Transfer Agreement as described in Item 3, neither the Reporting Persons, nor
to the knowledge of each Reporting Person, any of its directors or executive
officers has effected any transaction in Common Shares during the past sixty
days.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of PLDT
Reference is made hereby to Item 3 hereof which is incorporated by
reference in this Item 6.
The SMART Purchase Agreement
As described under Item 3, on March 24, 2000 the transactions
contemplated by the SMART Purchase Agreement were consummated. A copy of the
SMART Purchase Agreement and the first and second amendments thereto were
filed as Exhibits 2 through 4 to the 2000 Schedule 13D, and any description
contained in this Amendment relating to the SMART Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the
SMART Purchase Agreement and the first and second amendments thereto filed as
Exhibits 2 through 4 to the 2000 Schedule 13D.
The following summarizes certain of the principal terms of the SMART
Purchase Agreement.
A. Strategic Relationship
PLDT and NTTC agreed to form a strategic relationship in the
Philippines and, among other things, to establish a joint committee to explore
the development and marketing of products and services between the parties.
PLDT has agreed not to enter into another strategic alliance with another
party without the consent of NTTC provided that PLDT may, subject to certain
exceptions, designate as its "strategic partner" any person in which PLDT and
its subsidiaries own 25% or more of its capital stock.
B. Limitations on Competition by NTTC
Without PLDT's consent, the NTT Group may not invest in a business
competing with PLDT in respect of customers principally located in the
Philippines if such investment, when added to all prior investments by NTT and
its majority owned and controlled subsidiaries (the "NTT Holding Company
Group") in such business, is in excess of US$50 million (subject to certain
adjustments for inflation after December 31, 2000) or if such investment, when
added to all prior investments by the NTT Group in all such businesses for the
past 12 months, is in excess of US$100 million (subject to certain adjustments
for inflation after December 31, 2000). Similar limitations exist with respect
to NTTC's use of assets in the Philippines in such businesses.
C. Certain Approval Rights of NTT Communications
1. Capital Expenditures
Subject to certain exceptions, PLDT and/or its subsidiaries may make
any capital expenditures in connection with a single project if the total
capital expenditures required for such project will or will likely exceed
US$50 million (subject to certain adjustments for inflation after December 31,
2000), in each case only pursuant to the approval procedures described in
Paragraph 7 and if NTTC gives its written approval.
2. Investment in Existing Investees
Subject to certain exceptions, PLDT and/or its subsidiaries may make
any investments in or provide certain forms of financial support to any
existing investee of PLDT, if the cumulative value of all investment by PLDT
and its subsidiaries (the "PLDT Group") would exceed the sum of US$10 million
(subject to certain adjustments for inflation after December 31, 2000), plus
the aggregate book value of all investments made in such existing investee by
PLDT and its subsidiaries as of July 31, 1999, or to any existing investee,
if, for the past 12-month period, the cumulative value of all investments by
PLDT and its subsidiaries would exceed US$25 million (subject to certain
adjustments for inflation after December 31, 2000), in each case only pursuant
to the approval procedures described in Paragraph 7 and if NTTC gives its
written approval.
3. Investments in New Investees
Subject to certain exceptions, PLDT and/or its subsidiaries may make
any investments in or provide certain forms of financial support to any new
investee, if the cumulative value of all investments by PLDT and its
subsidiaries in such new investee would exceed US$50 million (subject to
certain adjustments for inflation), or to any new or existing investee, if,
for the past 12-month period, the cumulative value of all investments by PLDT
and its subsidiaries in new or existing investees would exceed US$100 million
(subject to certain adjustments for inflation), in each case only pursuant to
the approval procedures described in Paragraph 7 and if NTTC gives its written
approval.
4. Review of Limits
At the request of PLDT, on the third anniversary of the agreement,
NTTC will review the numerical limits set forth above in Paragraphs 1, 2 and
3, and NTTC may determine to increase any or all of such limits in light of
the financial condition and prospects of the members of the PLDT Group at such
time.
5. Exception for Capital Expenditures for or Investments in a NTT
Competing Business
NTTC may not withhold its consent to any proposed capital expenditure
or investment if (A) such proposed transaction would involve a person who is
in direct competition for the same business opportunities with the NTT Holding
Company Group, or involve a business in which the NTT Holding Company Group
is, or is to be, engaged in, and (B) the board of directors of PLDT confirms
in writing that proceeding with such transaction will not give rise to a right
to accelerate or otherwise demand payment of material indebtedness of PLDT.
6. Limitation on Competition Where Consent is Withheld
In the event NTTC withholds its approval in connection with PLDT's
proposed expenditure or investment, no member of the NTT Group may make a
similar or competing investment for a period of nine months following
notification by NTTC of its decision to withhold its consent.
7. Approval Procedures
PLDT and NTTC have agreed to certain discussion and written
notification procedures in connection with the approval process by NTTC in
respect of the above-mentioned proposed expenditures or investments (each, a
"Proposed Transaction"). Such procedures would require, among other things,
that NTTC give its approval to a Proposed Transaction unless it reasonably
concludes in good faith, having given proper consideration to all material
factors identified by PLDT, the best interests of PLDT and its shareholders
taken as a whole, and all other facts and circumstances that NTTC deems
relevant in making such decision, that the Proposed Transaction is not in the
best interests of PLDT and its shareholders taken as a whole.
In the event of any dispute between PLDT, the members of the FPC
Group and NTTC regarding whether NTTC has acted in accordance with the above
standard in withholding its consent to any Proposed Transaction, NTTC shall be
deemed for all purposes to have complied with the terms of the SMART Purchase
Agreement and not to have breached said agreement in withholding such
approval, unless PLDT shows, by clear and convincing proof, that NTTC did not
act in accordance with the standard in withholding its approval of such
Proposed Transaction.
D. Approval Rights Relating to Piltel
Prior written approval of NTTC is required with respect to certain
corporate actions relating to Piltel, including matters relating to the
integration of Piltel into the businesses of PLDT and its subsidiaries (the
"Piltel Integration"). PLDT and NTTC have established a joint inter-company
committee, which monitors the implementation of the Piltel Integration. Prior
to Closing, each of PLDT, NTTC and the FPC Group agreed upon the Piltel
Integration and the parameters were formally approved by the board of
directors of each of Piltel and PLDT.
Prior written approval of NTTC is required in connection with various
corporate and business actions of Piltel to the extent such actions would be
outside the Piltel Integration, including actions relating to any refinancing
of Piltel's debt or any additional investment in Piltel in excess of US$150
million (in the aggregate), changes to Piltel's capital stock, capital
expenditures, certain intercompany agreements and transactions, migration of
Piltel customers to PLDT or its subsidiaries, marketing and material asset
dispositions.
Prior to Closing, each of PLDT, NTTC and the FPC Group agreed upon a
plan for the restructuring of the financial obligations of Piltel (the "Piltel
Restructuring"). In June 2001, Piltel completed the restructuring of debts
amounting to approximately 98% of its total liabilities as of that date. Prior
written approval of NTTC is required for Piltel or PLDT to take certain
actions with respect to Piltel's creditors, including (i) entering into any
agreement with creditors that relates to a settlement of Piltel's financial
obligations, (ii) making a general assignment for the benefit of Piltel's
creditors, (iii) voluntarily seeking liquidation or the appointment of a
receiver and (iv) taking any corporate action authorizing any of the
foregoing.
PLDT is required under the SMART Purchase Agreement to use its
reasonable efforts to procure the implementation of the Piltel Integration and
Piltel Restructuring in accordance with their respective terms.
E. Limitations on the Issuance of Common Capital Stock
Subject to certain exceptions, under the terms of the SMART Purchase
Agreement, PLDT may not issue Common Shares or securities convertible into or
exchangeable for Common Shares without the prior written approval of NTTC
unless PLDT has first offered NTTC the right to purchase a number of shares
equal to its pro-rata portion of the number of shares proposed to be issued.
By operation of Philippine law, holders of Common Shares will, with certain
exceptions, have preemptive rights with respect to issuances of new Common
Shares, including issuances of Common Shares to NTTC pursuant to any exercise
by NTTC of the rights referred to above.
F. Termination of Approval Rights
The approval rights of NTTC summarized in Paragraphs A, B, C, D and E
will terminate when the NTT Group holds less than 10% of the outstanding
Common Shares (subject to certain adjustments), including certain adjustments
for dilution arising out of settlements with Piltel's creditors.
The Shareholders Agreement
Simultaneous with the closing under the SMART Purchase Agreement, the
FPC Parties, NTTC and NTT-UK (the "Party Shareholders") entered into the
Shareholders Agreement. A copy of the Shareholders Agreement was filed as
Exhibit 5 to the 2000 Schedule 13D, and any description contained in this
Statement relating to the Shareholders Agreement does not purport to be
complete and is qualified in its entirety by reference to the Shareholders
Agreement filed as Exhibit 5 to the 2000 Schedule 13D.
Given the terms of the Shareholders Agreement (as described herein),
the Reporting Persons and the other parties to the Shareholders Agreement
might be deemed to constitute a "group." However, the Reporting Persons
disclaim that they have agreed to act as a group with any other parties to the
Shareholders Agreement (other than to the extent provided in the Shareholders
Agreement) and the Reporting Persons disclaim beneficial ownership of Common
Shares other than the amounts of shares reported for the Reporting Persons
herein.
A. Board and Committee Representation
Under the Shareholders Agreement, NTTC is entitled to nominate two
directors to the PLDT board of directors and the FPC Parties are entitled to
nominate, collectively, six directors to the board. The Shareholders Agreement
provides that it is the current intention of each of NTTC and the FPC Parties,
subject to certain exceptions, to cast its votes as shareholders of PLDT to
procure that the persons nominated by each other to PLDT's board of directors
are elected to the board (to the extent permitted by applicable laws and
regulations and only to the extent required to ensure the election of the
other's nominees).
With respect to PLDT's subsidiaries, the Shareholders Agreement also
provides that NTTC will be entitled to nominate two directors to the SMART
board of directors and one member to the board of directors of all other PLDT
subsidiaries (in all cases, to the extent permitted by applicable laws and
regulations); provided, however, that PLDT has the power to elect not less
than 2 directors of its subsidiaries and that directors elected by PLDT will
always constitute a majority of the board of directors of the other
subsidiaries.
With respect to committees of the boards of PLDT and its
subsidiaries, NTTC will be entitled to appoint at least one member, and in
some instances two members, to such committees; provided, however, that if
applicable law does not permit such persons to serve as members, NTTC shall be
entitled to appoint advisors to each such committee.
B. Unanimous Consent
The Party Shareholders agreed not to permit PLDT, without the prior
written consent of all the other parties, to:
(i) engage in any business other than the telecommunications and
related activities currently engaged in by PLDT or cease to carry on any
substantial part of the telecommunications and related activities currently
engaged in by PLDT;
(ii) merge or consolidate with or into any other company or entity;
(iii) take any steps to effect the winding up of PLDT or pass any
resolution to liquidate PLDT; or
(iv) apply to any court, administrative agency or tribunal to order a
meeting of creditors or any class of creditors or members or any class of
members or to sanction any compromise or arrangement between creditors or
shareholders of PLDT.
C. Restrictions on Transfer of Common Shares and PTIC Shares
A Party Shareholder may transfer its Common Shares only after
offering to sell such Shares to the non-disposing Party Shareholders or with
the prior written consent of the other Party Shareholders. Party Shareholders
may encumber their Common Shares provided that such encumbering Party
Shareholder provides certain information regarding the encumbrance to the
non-encumbering Party Shareholders. Similar restrictions apply to shares of
Philippine Telecommunications Investment Corporation.
In addition, for a period of three years from March 24, 2000, the
Party Shareholders are not permitted to transfer their interests in Common
Shares to an unrelated third party competitor without the prior written
consent of the other Party Shareholders. In such circumstances, the Party
Shareholders must grant to the other Party Shareholders a right of first offer
to purchase Common Shares that are being offered to transferees other than
certain affiliates.
D. Termination
The Shareholders Agreement will terminate when either the NTT Group
holds less than 10% of the outstanding Common Shares (subject to certain
adjustments, including certain adjustments for dilution arising out of
settlements with Piltel's creditors) or the FPC Parties hold less than 20% of
the effective voting power of PLDT.
The Registration Rights Agreement
On March 24, 2000, PLDT entered into registration rights agreements
with each of NTTC and the FPC Group in connection with the registration of
their Common Shares. (A copy of the Registration Rights Agreement among PLDT,
NTT-UK and NTTC was filed as Exhibit 6 to the 2000 Schedule 13D, and any
description contained in this Statement relating to the Registration Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Registration Rights Agreement filed as Exhibit 6 to the 2000
Schedule 13D.)
The Registration Rights Agreement provides for four demand
registrations and unlimited piggy-back registration rights with respect to
NTTC's Common Shares. The rights are subject to the rights of PLDT to delay or
suspend registration upon the occurrence of certain events and certain
holdback agreements. PLDT is responsible for all fees and expenses in
connection with all but one of the demand registrations and all of the
piggy-back registrations (other than fees and expenses of legal counsel for
NTTC and the FPC Group).
NTT Commercial Agreements
Ancillary to the SMART Transaction, PLDT and NTTC entered into
various commercial agreements which provide for, among other things, the
provision of mutual services on arm's length pricing terms, access to NTTC's
telecommunications network services and joint marketing efforts. PLDT and NTTC
also entered into an Advisory Services Agreement in connection with these
commercial agreements.
A. Service Provider Agreement
NTTC, along with certain other service providers, operates global and
international voice and data managed telecommunications services marketed
under the brand name "Arcstar" using the telecommunications network of NTTC
and other service providers (the "Arcstar Network Services"). In connection
with the appointment of PLDT as a service provider of the Arcstar Network
Services, the parties have agreed to the following:
1. NTTC will, at its cost and expense, design the system
specification of the equipment through which PLDT will provide the Arcstar
Network Services. PLDT will pay for the installation, assembly and subsequent
maintenance and modification of such equipment.
2. NTTC will design and determine a global network topology for use
in connection with the Arcstar Network Services and to the extent commercially
practical, PLDT will prepare, install, set-up, maintain, and modify, at its
cost and expense, the facilities within its network and the international
leased circuits to be used in connection with the provision of the Arcstar
Network Services in the Philippines.
3. PLDT will procure, maintain, manage and operate, at its cost and
expense, standard local access lines in the Philippines to be used for the
purpose of providing the Arcstar Network Services, the establishment of which
is subject to NTTC's acceptance.
4. Upon reasonable belief by both parties of customer demand, PLDT
will make capital expenditures of up to an aggregate of US$10 million
(excluding the cost of international private line circuits and local access
lines) during the next three years to procure hardware and software for the
provision of the Arcstar Network Services, according to a business plan agreed
to jointly between NTTC and PLDT.
5. PLDT will, at its cost and expense, procure the carrier management
equipment (the "CME") and install and design the system-configuration of the
CME as specified by NTTC for rental or sale to its customers, the rental
tariff of which will be determined by NTTC.
6. PLDT will promote, market and sell the Arcstar Network Services to
its customers on a preferential basis over other competing services subject to
customer suitability.
B. Tradename and Trademark Agreement
PLDT entered into an agreement with NTTC which provides that NTTC
will license to PLDT certain tradenames and trademarks to be used in
connection with the marketing, promotion and selling of the Arcstar Network
Services in the Philippines.
C. Conventional International Telecommunications Services Agreement
PLDT and NTTC agreed to certain mutually beneficial bilateral
arrangements for conventional international telecommunications services as
follows:
1. PLDT and NTTC will provide each other with transit and refiling
services of their respective international outgoing calls subject to various
conditions, including having excess capacity, non-interference with existing
bilateral arrangements, terms no less favorable than those offered to other
carriers and overall strategic objectives.
2. PLDT and NTTC will seek to agree to terminate the outgoing calls
to Japan and the Philippines, respectively, of the other party and will give
each other rights of last bid subject to various limitations, including
certain return traffic ratios of PLDT and NTTC, respectively, with third
parties, and on terms being no less favorable than those offered to other
carriers.
3. Subject to certain terms and conditions, PLDT and NTTC will agree
to cooperate in matters relating to international private leased circuit
services, excess cable capacity and cable capacity swap and planning.
D. Internet Agreement
PLDT and NTTC agreed to coordinate their plans for deployment of
Internet transmission capacity for access to and connectivity with the public
Internet (the "Internet") as follows:
1. PLDT will not construct or procure additional Internet capacity
between the Philippines and destinations outside of the Philippines
("Capacity") or increase the capacity of its existing access to and
connectivity with the Internet without prior consultation with NTTC.
2. The parties will form a joint committee to discuss opportunities
for use by PLDT of NTTC's international transport facilities providing access
to and connectivity with the Internet.
3. PLDT will inform NTTC of its plans to allow a third party to carry
its Capacity or plans to use or increase its Capacity for its own use or use
by a third party (other than Capacity to the U.S.) and NTTC will be given a
right of last bid to match the terms and conditions of such proposal.
4. Subject to certain conditions, NTTC will also be given a right of
last bid in connection with PLDT's plans to introduce Internet-related and
other value added services on the Internet, which require end-to-end
arrangements with overseas providers.
E. Advisory Services Agreement
NTTC provides PLDT with technical consultants, who advise PLDT's
finance group, strategy and support sector, information systems sector and
corporate customer service group and the Arcstar Network Services.
Information about pledges or contingencies giving other persons voting or
investment power over PLDT Shares beneficially owned by the Reporting Persons
The Fernandez Petition
On December 9, 1999, a preferred stockholder of PLDT, Victor C.
Fernandez, filed a petition (with Application for the Issuance of a Writ of
Preliminary Injunction) (the "Fernandez Petition") against the then incumbent
directors of PLDT before the Philippine Securities and Exchange Commission
(the "PSEC") questioning the validity of the resolutions of the Board of
Directors of PLDT authorizing the acquisition of SMART. Fernandez claimed that
he would suffer injury from dilution of his shares and the possible revocation
of PLDT's franchise in view of the violation of the Philippine Constitution's
foreign equity restrictions and anti-trust provision if said resolutions were
implemented. Fernandez also claimed that NTTC's approval rights would
constitute foreign intervention in the management and operation of a public
utility and that the SMART shares being acquired by PLDT were overvalued.
The request of Victor C. Fernandez for the issuance by the PSEC of a
temporary restraining order to enjoin the holding of the special meeting of
the stockholders of PLDT on December 10, 1999 was denied by the PSEC thereby
allowing said meeting to proceed as scheduled. The stockholders approved the
resolutions passed by the Board of Directors authorizing the acquisition of
SMART. On June 20, 2000, the PSEC denied Fernandez's application for a writ of
preliminary injunction.
In view of the provisions of Republic Act No. 8799 enacted in July
2000, referred to as the Securities Regulations Code, transferring the
jurisdiction of intra-corporate controversies to the Regional Trial Court, the
PSEC transferred the case to the Regional Trial Court of Manila. By a motion
filed by the parties, the case was later ordered transferred to the Regional
Trial Court of Makati City, the proper venue pursuant to the Rules of
Procedure Governing Intra-Corporate Controversies. The case is now pending
before the Regional Trial Court of Makati City.
The Makati Court has conducted pre-trial proceedings and has directed
the parties to file their respective memoranda on Fernandez's claim. The
memoranda are expected to be filed with the court on or about the week of
December 23rd. The Makati Court is expected to render its decision on the
merits of Fernandez's claim not later than 90 days following the deadline to
file such memoranda.
* * *
Except as set forth in Item 3, Item 4 and Item 6, none of the
Reporting Persons, nor to the best of their knowledge, any of the other
persons named in Item 2, has any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of PLDT, including but not limited to any agreements concerning (i)
transfers or voting of the securities, (ii) joint ventures, (iii) loan or
option arrangements, (iv) puts and calls, (v) guarantees of loans, (vi)
guarantees against loss, (vii) guarantees of profits, (viii) division of
losses or profits, or (ix) the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit
Number Exhibit
1 Joint Filing Agreement dated December 11, 2002.
S I G N A T U R E
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Date: December 11, 2002
NIPPON TELEGRAPH AND TELEPHONE CORPORATION
/s/ Norio Wada
--------------------------
Name: Norio Wada
Title: President
S I G N A T U R E
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Date: December 11, 2002
NTT COMMUNICATIONS CORPORATION
/s/ Masanobu Suzuki
------------------------
Name: Masanobu Suzuki
Title: President and CEO
S I G N A T U R E
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Date: December 11, 2002
NTT COMMUNICATIONS CAPITAL (UK) LIMITED
/s/ Sadao Maki
-----------------------------
Name: Sadao Maki
Title: Director/Executive Officer
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF
NIPPON TELEGRAPH AND TELEPHONE CORPORATION ("NTT")
The name, country of citizenship, residential or business address,
present principal occupation or employment, and the name, principal business
and address of any corporation or other organization in which such employment
is conducted, of each of the directors and executive officers of NTT is set
forth below. All of the persons listed below are directors of NTT and unless
otherwise indicated, each occupation set forth opposite a director's name
refers to employment with NTT. If no address is given, the director's business
address is 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, Japan. NTT's
principal business is serving as a holding company for subsidiaries engaged in
providing telecommunications services. These services fall into seven major
classes: telephone services, telegraph services, leased circuit services, data
communication facility services, Integrated Services Digital Network ("ISDN")
services, sale of telecommunication equipment and other services.
Present Principal
Country of Occupation or Employment
Name Citizenship and Principal Business
---- ----------- ------------------------
Norio Wada Japan President
Haruki Matsuno Japan Senior Executive Vice President
Hiromi Wasai Japan Senior Executive Vice President
Toyohiko Takabe Japan Senior Executive Vice President
Satoru Miyamura Japan Executive Vice President
Yuji Inoue Japan Senior Vice President
Shin Hashimoto Japan Senior Vice President
Masaki Mitsumura Japan Senior Vice President
Hiroo Unoura Japan Senior Vice President
Jun-ichiro Miyazu Japan Chief Executive Counselor
Takashi Imai Japan Chairman and Representative Director
of Nippon Steel Corporation
6-3, Otemachi 2-chome,
Chiyoda-ku, Tokyo 100-8017, Japan
Yotaro Kobayashi Japan Chairman and Representative Director
of Fuji Xerox Co., Ltd.
17-22, Akasaka 2-chome,
Minato-ku, Tokyo 107-0052, Japan
SCHEDULE B
DIRECTORS AND EXECUTIVE OFFICERS
OF
NTT COMMUNICATIONS CORPORATION
("NTTC")
The name, country of citizenship, residential or business address,
present principal occupation or employment, and the name, principal business
and address of any corporation or other organization in which such employment
is conducted, of each of the directors and executive officers of NTTC is set
forth below. All of the persons listed below are directors of NTTC and unless
otherwise indicated, each occupation set forth opposite a director's name
refers to employment with NTTC. If no address is given, the director's
business address is 1-6 Uchisaiwai-cho, 1-chome, Chiyoda-ku, Tokyo 100-8019,
Japan. NTTC's principal business is providing international and long distance
telecommunications services and data transmission services.
Present Principal
Country of Occupation or Employment
Name Citizenship and Principal Business
---- ----------- ------------------------
Masanobu Suzuki Japan President and CEO
Mamoru Ishida Japan Senior Executive Vice President
Shuuji Tomita Japan Senior Executive Vice President
Kiyoshi Isozaki Japan Executive Vice President;
Takebashi Building
2-2, Hitotsubashi 1-chome,
Chiyoda-ku, Tokyo 100-8128, Japan
Satoshi Fujita Japan Executive Vice President;
Kowa Nishi-shimbashi Bldg. B
14-1, Nishi-shimbashi 2-chome,
Minato-ku, Tokyo 105-0003, Japan
Shunsuke Amiya Japan Executive Vice President
Hisao Iizuka Japan Senior Vice President;
Tokyo Opera City Tower
20-2, Nish-shinjuku 3-chome,
Shinjuku-ku, Tokyo 163-1422, Japan
Mitsuhiro Takase Japan Senior Vice President
Masayuki Nomura Japan Senior Vice President
Masae Tamura Japan Senior Vice President
Yo Yusa Japan Senior Vice President;
Tokyo Opera City Tower
20-2, Nishi-shinjuku 3-chome,
Shinjuku-ku, Tokyo 163-1422, Japan
Yutaka Aoki Japan Senior Vice President
Osamu Inoue Japan Senior Vice President;
3rd Floor, Devon House
58-60 St. Katherine's Way
London E1 9LB, United Kingdom
Hiroshi Nakagawa Japan General Manager of Department V
Nippon Telegraph and Telephone Corporation
3-1, Otemachi 2-chome,
Chiyoda-ku, Tokyo 100-8116, Japan
SCHEDULE C
DIRECTORS AND EXECUTIVE OFFICERS
OF
NTT COMMUNICATIONS CAPITAL (UK) LIMITED
("NTT-UK")
The name, country of citizenship, residential or business address,
present principal occupation or employment, and the name, principal business
and address of any corporation or other organization in which such employment
is conducted, of each of the directors and executive officers of NTT-UK is set
forth below. If no address is given, the director's business address is 1-6,
Uchisaiwai-cho 1-chome, Chiyoda-ku, Tokyo 100-8019, Japan. All of the persons
listed below are directors of NTT-UK and each occupation set forth opposite
such director's name refers to employment with NTT-UK. NTT-UK's principal
business is acting as an investment holding company.
Present Principal
Country of Occupation or Employment
Name Citizenship and Principal Business
---- ----------- ------------------------
Sadao Maki Japan Executive Officer
Kiyoshi Maeda Japan Executive Officer
Jun Sawada Japan Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Exhibit
1 Joint Filing Agreement dated December 11, 2002.
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of
1934, as amended, the undersigned agree to the joint filing on behalf of each
of them of a statement on Schedule 13D with respect to the shares of common
capital stock of Philippine Long Distance Telephone Company and further agree
that this Joint Filing Agreement be included as an Exhibit to such joint
filing. This Joint Filing Agreement may be executed in any number of
counterparts all of which taken together shall constitute one and the same
instrument.
In evidence thereof, the undersigned, being duly authorized, hereby
executes this Joint Filing Agreement on December 11, 2002.
NIPPON TELEGRAPH AND TELEPHONE CORPORATION
/s/ Norio Wada
---------------------------
Name: Norio Wada
Title: President
NTT COMMUNICATIONS CORPORATION
/s/ Masanobu Suzuki
----------------------------
Name: Masanobu Suzuki
Title: President and CEO
NTT COMMUNICATIONS CAPITAL (UK) LIMITED
/s/ Sadao Maki
-----------------------------
Name: Sadao Maki
Title: Director/Executive Officer