PLDT Inc., through its legal counsel, asked a US court to deny the class action lawsuit filed by certain investors against the company and nine of its current and former executives over the alleged P48-billion budget spending mess, citing minimal losses incurred by complainants.
PLDT said in a disclosure to the Philippine Stock Exchange Milbank LLP, an international law firm based in New York City, entered its appearance on behalf of the company on April 17 in the US class action, and filed a notice of interested persons or entities and corporate disclosure statement and memorandum of points and authorities for consideration by the US Federal District Court in the Central District of California.
Sophia Olsson, who claims to have owned two PLDT shares and allegedly suffered $22.69 in losses and Kevin Douglas, who claims to have owned 35 PLDT shares and allegedly lost $240.23 in the aftermath of the disclosure of the “budget overrun”, each represented by a different law firm, submitted separate motions to the court to serve as lead plaintiff in the US Class Action on April 7.
PLDT said in a memorandum filed before the court that Olsson and Douglas failed to establish that they are appropriate lead plaintiffs in the US class action given that under the Private Securities Litigation Reform Act, lawsuits by shareholders with a small position in the security at issue are discouraged.
“Consequently, the company argued that the de minimis purported losses alleged by the movants in this case ($22.69 for Olsson and $240.23 for Douglas) fall far short of the basic requirement that a lead plaintiff make a prima facie showing that he or she is an adequate representative who will prosecute the action vigorously on behalf of the putative class,” it said.
PLDT said Olsson’s and Douglas’ nominal losses show that they “lack sufficient financial interest in the outcome of the [US Class Action] to incentivize them to monitor counsel’s performance and control the litigation on behalf of the putative class.”
“Thus, the company argued in its Memorandum that the Movants’ motions for appointment as lead plaintiff should be denied,” it said.
PLDT said the hearing for the appointment of the lead plaintiff is scheduled on May 8, 2023.
PLDT said in March its forensic review of the elevated capex for 2019 to 2022 was substantially completed and it found “no evidence of fraud, intentional concealment or bad faith conduct on the part of any employee of the company.”
PLDT also completed discussion with major vendors representing about 80 percent of its outstanding capex commitments as of December last year.
The company signed settlement and mutual release agreements with major vendors in March 2023, which resulted in the reduction of outstanding commitments to P33 billion from P48 billion.
S&P Global Ratings early this month downgraded PLDT’s long-term issuer credit rating to ‘BBB’ from ‘BBB+’ over the company’s overspending issue.