ABS-CBN Corp.’s share price dropped 29.19 percent on its first trading day following eight sessions of trading suspension.
The broadcasting company, whose franchise to use free to air TV airwaves was recently denied renewal by the House of Representatives, saw its share price settle at P10.36 compared to P14.78 when it was last traded on July 10, 2020.
The Philippine Stock Exchange ordered a trading suspension on ABS-CBN shares last July 13, pending a comprehensive disclosure by the company on the declined franchise renewal.
In the company’s disclosure Monday, ABS-CBN said it was in discussion with creditor banks with respect to its long-term debts.
“We are not aware of other material contracts, nor have we received any claims or demands, the payment obligations of which will be adversely affected by the Resolution,” it said.
To mitigate the impact of the denial of the franchise application, ABS-CBN added it plans to “continue to operate in other businesses that do not require a legislative franchise, such as, international licensing and distribution, digital and cable businesses, as well as, continue with the syndication of content through various streaming services.
“The company has adopted and continues to implement cost control measures, reducing general administrative expenses (GAEX) or overhead, rationalizing capital expenditures, and streamlining its manpower requirements as discussed below. Given the reduced operations, the company is reviewing its current business models, structures, processes and systems, for a more agile, efficient and effective organization,” it also said.
The company said it will focus on businesses that will generate growth in revenues and is reducing investments in non-core activities. It recently announced the closure of KidZania Manila due to conditions brought by the coronavirus pandemic.
ABS-CBN added it is “committed to honor all existing obligations for goods delivered and services rendered by its third party suppliers and/or to negotiate new terms for these obligations, should it be necessary.”
“The denial of the franchise application of ABS-CBN to construct, install, establish, operate, and maintain radio and television broadcasting stations in the Philippines does not affect the primary franchise of ABS-CBN to exist as a corporation and does not affect the rights of its shareholders,” it said.
Prior to the House committee hearings, the renewal saga had been highlighted by a strong statement from President Duterte opposing the renewal of ABS-CBN’s franchise. In May, despite prior commitment by the National Telecommunications Commission (NTC) to grant ABS-CBN a provisional franchise while the Congress hears its renewal, the company’s franchise lapsed after Solicitor General Jose Calida intervened and warned the NTC it will be charged with graft should it issue a provisional license to ABS-CBN, saying it has no power to do so.
