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Ongpin’s P21-b donation

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by August 18, 2016 General

On Wednesday, Aug. 17, businessman Roberto “Bobby” Ongpin offered to donate nearly half or 49 percent of listed company PhilWeb to the state-owned Philippine Amusement and Gaming Corp., the country’s biggest gambling operator and the third biggest revenue maker of the government.  

Another 4.7 percent is to be donated to the Ateneo de Manila’s JV Ongpin Foundation which sends some 200 poor students to school.  The 49 and the 4.7 percent both belong to Ongpin, his 53.7 percent ownership of PhilWeb.

In February 2016, three months before President Duterte’s election, gaming firm PhilWeb was valued at P28 per share or P40.2 billion based on its 1.435 billion shares outstanding.  Of that, 771 million shares (Ongpin’s 53.7 percent) were valued then at P21.588 billion.

In effect, Bobby Ongpin is divesting himself  totally from PhilWeb.  His holdings, worth P21.588 billion last February, were valued of yesterday at P9.18 per share, or only P7 billion.  

PhilWeb’s stock price hit a low of P3.02 on Aug. 9, 2016, the day President declared Ongpin an oligarch embedded in government who must destroyed.  At that 52-week low price, Ongpin’s equity ownership was worth P2.328 billion. 

In just seven months, Ongpin’s ownership of PhilWeb gyrated in value from a high of P21.58 billion to a low of P2.32 billion then to the current market valuation of P7 billion.  

By any measure, P7 billion is money one cannot sneeze at.  It is equivalent to the combined tax payments of the country’s 35 biggest individual taxpayers in 2014.  It is more than two times what Pagcor makes in a year from its casinos.

Bobby’s offer to donate thus is not an empty gesture.  The man is donating a net worth and a business, valued as of yesterday at P9.33 billion.  PhilWeb can easily claim back its P40-billion market value if Pagcor makes the right moves and Duterte scales down his anti-Ongpin rhetoric.

Unknown to many, the biggest beneficiary of PhilWeb’s business is Pagcor which gets 42 percent of the company’s earnings from e-Games.  That amounted to P2.1 billion in 2015.  Another 28 percent goes to the PhilWeb’s operators (286 of them), 2 percent for marketing, and the remaining 28 percent to PhilWeb.

So If Duterte wants to phase out PhilWeb, he is in effect harming Pagcor. Ironically, the biggest individual beneficiary of Pagcor is the President of the Philippines who draws as much as P2 billion a year in special fund, a glamorized Priority Develomen Assistance Fund.

With Manila being developed as a gaming (or if you may, casino) city to rival Macau and Singapore, and with 120 million Chinese travelling overseas a year looking for fun and sun, PhilWeb’s outlook was certainly bright.

After Duterte sought to destroy Ongpin and PhilWeb, the beleaguered tycoon called a meeting of the company’s stockholders and tried to auction his 53.7 percent of the company.   Five made bids—three foreign companies and two local firms.  

Obviously, PhilWeb is an attractive buy.  How else can you explain its nearly tripling its price, from a low of P3.02 share to yesterday’s P9 a share, despite its present vicissitudes?

In his pained letter to Pagcor on Aug. 17, Ongpin said he was making “a final attempt to save the jobs of about 700 PhilWeb employees, plus about 5,000 others who are employed by the PAGCOR operators in 286 e-Games sites. They all have been out of work since PhilWeb’s license expired on Wednesday last week, August 10.”

Ongpin limited his donation to Pagcor to 49 percent “to avoid PhilWeb being classified as a government-owned and controlled corporation, which would make the various restrictions applicable to GOCCs result in making PhilWeb’s operations untenable.”

The remaining 4.7 percent, meanwhile, could easily double, or even triple the 200 students financed by Ateneo’s JVO Scholarship Fund (named after Bobby’s late brother, Jimmy, but funded by the elder brother).

There is only one implied condition with Bobby’s donation—Pagcor should renew PhilWeb’s license.  Renewal enables Pagcor to continue receiving more than P2 billion in annual gains from PhilWeb.  More importantly, perhaps, it will save the “livelihood of about 6,000 employees and their families,” says Ongpin.

Analysts (which include me) say it will be insane for Pagcor not to give PhilWeb the lifeline it sorely needs, the renewal of its license.

 Ongpin insists PhilWeb’s e-Games casinos are actually owned by Pagcor but operated by PhilWeb as a technology service provider. “It is not online gaming,” he asserts. 

He elaborates: “Online means that it can be accessed from a computer, whether at home or in the office. One can only play if one physically goes to an e-Games establishment. In addition to the stringent conditions of entry into an e-Games unit, each patron is subjected to stringent identity requirements to ensure that they are of the proper age and that they are not employees of government entities and other criteria.”

Duterte thinks PhilWeb’s business is nothing more than gambling and that it hurts small people.  

Pagcor itself, in addition to its own casinos, has licensed four brand-new large casino operators.  The bulk of their clients are not foreigners but Filipinos.  The bulk of those Filipinos are not the rich and famous.  They are small Filipinos (the tsinelas or laylayan class of Leni Robredo) who are dear to Duterte’s heart.

So Duterte has to be true to himself.  Renew PhilWeb’s license.  Or shut down his own Pagcor and all the casinos authorized by Pagcor.  The President seems to think Pagcor is fun.  He recently appointed entertainers and comedians to its board and top management.

Just like drugs, gambling is a vice that cannot be compartmentalized.  It hurts everyone, rich and poor, saints and sinners.

How about it, idol?

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