ABS-CBN makes room for new owners

Hours after a quiet annual meeting, ABS-CBN moved to triple its authorized capital and expand its board. The P6-billion rescue brings money without more debt, but at the price of diluting the owners already there. The new investors were nowhere in sight when ABS-CBN Corp. held its virtual annual stockholders’ meeting Wednesday morning, August 19. By afternoon, the company had started making room for them. Hours after stockholders elected a 7-member board and adjourned an annual meeting whose agenda had been set before ABS-CBN’s P6-billion rescue was signed, the newly organized board proposed adding two more chairs around its own table. It also approved tripling the company’s authorized capital, creating enough shares for the investors putting fresh money into the wounded media company. Stockholders will be called back on September 30 to approve both changes. The capital increase was expected. ABS-CBN has agreed to issue 1,643,835,616 new common shares in exchange for the P6 billion, but it simply does not have enough shares available today to give the investors. The two additional seats around the board table are more intriguing. ABS-CBN did not say who they are intended for, but their creation comes just a week after I&C Holdings Corp. agreed to put P3.5 billion into ABS-CBN, by far the biggest contribution to the rescue. Three Lopez family branches — Crème Investment Corp., Mantes Corp., and Presta Holdings Company Inc. — are putting in another P2.2 billion from personal resources, while Lopez Inc., the longtime controlling shareholder that sits at the apex of the Lopez empire structure, had earlier been identified as contributing another P300 million. It is therefore too early to say whether one or both new seats are being created for I&C, for representatives of the Lopez branches putting fresh money directly into ABS-CBN, or for someone else altogether. What is clear is that a 7-member board elected Wednesday morning could become a 9-member board after the rescue, making the corporate math about much more than creating enough shares. The P6 billion will also redraw who owns how much of ABS-CBN, including the stake of the Lopez holding company that for decades sat comfortably in control. Making room upstairs and downstairs First, ABS-CBN has to create the shares. Its authorized capital stock is currently P1.5 billion, made up of 1.3 billion common shares at P1 par value each. With almost 900 million common shares already issued, there is not enough room under that limit to issue another 1.64 billion shares for the new investors. To fix this, the board approved increasing authorized capital stock threefold, from P1.5 billion to P4.5 billion. This raises the number of authorized common shares from 1.3 billion to 4.3 billion, while the one billion preferred shares stay the same. The higher limit gives ABS-CBN more flexibility than it immediately needs: even after issuing the 1.64 billion new shares, it will still have unissued shares available if it needs to raise more capital in the future. ABS-CBN said the purpose of the amendment was to accommodate the new subscriptions of I&C, Crème, Mantes, and Presta. One name is conspicuously absent from that list: Lopez Inc., which had earlier been identified as contributing P300 million to the P6-billion rescue. Its omission from the August 19 disclosure needs clarification from ABS-CBN before conclusions can be drawn about whether its investment is being treated differently or has changed. But the company is not only making room in its capital structure. It is also proposing to make room around the table that governs it. Only hours before proposing a 9-member board, ABS-CBN stockholders had elected 7 directors: chairman Martin Lopez, president and CEO Carlo Katigbak, Charo Santos-Concio, Federico “Piki” Lopez, Rafael Lopez, and independent directors Monico Jacob and Honorio Poblador IV. The three Lopez directors represent three branches of the family: Piki from the Oscar branch, Martin from the Manolo branch, and Rafael from the Geny branch. Rafael is the brother of former ABS-CBN chairman Gabby Lopez, whose branch recently sold its stake in Lopez Inc. There was no I&C representative among the 7, which was hardly surprising since the nomination and voting process for Wednesday’s annual meeting had been set in motion before I&C signed its subscription agreement. By afternoon, however, ABS-CBN was proposing two more seats, giving the company room to accommodate new representation without necessarily displacing any of the 7 directors stockholders had just elected. But who gets those two chairs remains unanswered. I&C is the obvious party to watch because it is putting up P3.5 billion, more than half of the P6 billion rescue money, but Crème, Mantes, and Presta together are putting in another P2.2 billion directly from three Lopez family branches. ABS-CBN has disclosed neither the intended nominees for the additional seats nor any board representation rights negotiated with the investors. For now, the two chairs are empty. The two independent directors who left the board on Wednesday, Randy David and Emmanuel “Noel” de Dios, meanwhile remain inside ABS-CBN’s governance orbit: the new board appointed both to its Board of Advisors, alongside Cynthia del Castillo, Federico Garcia, Antonio Jose Periquet, former finance secretary Cesar Purisima, and Salvador Tirona, while Poblador was designated lead independent director. The price of money There was another way for P6 billion to enter ABS-CBN. The new investors could have advanced or lent the money to the company, avoiding the need to create 1.64 billion new shares, but that would also have added another obligation to a company already carrying billions of pesos in debt. Loans have to be repaid and generally carry interest that must be serviced whether or not the underlying business has recovered enough to make money. ABS-CBN chose instead one of the most ordinary ways companies raise fresh capital: equity. The investors put money into ABS-CBN in exchange for newly issued shares and become owners themselves. Unlike lenders, equity investors do not expect the company to pay them contractual interest every month, quarter or year, nor does ABS-CBN eventually have to repay their P6 billion as loan principal. Their return depends instead on what happens to the company they now partly own — whether the wounded business heals, turns around its dire financial situation, becomes profitable again and eventually produces returns through dividends or a more valuable stake. For ABS-CBN, that means P6 billion of fresh capital without adding another P6 billion to an already heavy debt load. But equity has its own price: dilution. ABS-CBN currently has almost 900 million common shares outstanding, and Lopez Inc. owns about 502 million of these, or roughly 55.8%, making it the majority shareholder before the new investment. Think of ownership as a fraction: Lopez Inc.’s shares are the numerator, while the total number of shares in the company is the denominator. When 1.64 billion new shares are added, the denominator grows sharply, but the numerator for each existing shareholder stays the same unless they buy more. Existing shareholders still own the same number of shares, but because the denominator has expanded, each share now represents a smaller slice of the company. This is dilution in simple terms: the pie gets bigger, but your slice does not, so your percentage shrinks. This means all current investors — including ordinary stock market buyers and major shareholders like Batangas representative Leandro Leviste and Lopez Inc. — end up owning a smaller percentage of ABS-CBN than before unless they increase their numerator by buying into the new offering. Lopez Inc. is not standing still in this process. Its proposed P300 million fresh investment would soften that fall because it would receive new shares in return, increasing its own numerator as the denominator expands. And Lopez Inc. is not acting alone in the broader family ecosystem. Crème, Mantes, and Presta, representing three allied Lopez family branches putting another P2.2 billion directly into ABS-CBN. Taken together, and depending on final allocation and pricing, these related family investments could still leave the Lopez group collectively holding a majority stake in the expanded company (more than 50%, based on previous estimates by Rappler, read here), even as individual percentages shift sharply. That said, Lopez Inc. on its own is still significantly diluted. A Rappler estimate puts Lopez Inc.’s post-transaction stake at only about 23%, underscoring how steep the dilution becomes once the full P6-billion equity round is taken up. The scale mismatch is clear: the P300 million accounts for only about 5% of the total infusion, even as Lopez Inc. enters the transaction as ABS-CBN’s 55.8% owner. If all P6 billion is ultimately subscribed at the same price, that additional investment will cushion its dilution but will not, by itself, preserve its majority stake. The final ownership percentages will still depend on the exact allocation and pricing of the new shares, which ABS-CBN has not yet fully disclosed. That is the trade-off embedded in the rescue: instead of taking on another P6 billion in debt, ABS-CBN is effectively paying for its lifeline by giving up a much larger share of itself. Why September 30? None of these changes takes effect simply because the board wants them. Increasing ABS-CBN’s authorized capital and expanding its board require amendments to its Articles of Incorporation, with the capital increase requiring approval by stockholders representing at least two-thirds of the outstanding capital stock before going through the remaining regulatory process. ABS-CBN has scheduled that vote for September 30, with September 7 as the record date. September 30 can feel like a long time away for a company urgently seeking fresh money, but a special stockholders’ meeting cannot simply be summoned the following morning. ABS-CBN has to determine which stockholders are entitled to vote, prepare the information explaining the proposed amendments, go through the required filing and notice process, give stockholders time to vote, secure the necessary approval and then take the amendments through the remaining Securities and Exchange Commission (SEC) process. The timetable therefore shows how the corporate machinery has to catch up with a transaction assembled in August. What makes September 30 more consequential is another clock already running inside ABS-CBN. The latest disclosed extension on its P5 billion BPI loan facility expires August 31, a month before the special meeting, while its P4.75 billion UnionBank loan runs until September 30, the very day stockholders vote. That coincidence should not be read to mean ABS-CBN automatically has to hand UnionBank P4.75 billion that day. ABS-CBN has been negotiating longer-term refinancing, and the lenders could extend, refinance or restructure the facilities again. But it exposes the different speeds at which ABS-CBN’s rescue is moving. The debt clock is running faster than the equity clock: BPI’s current deadline arrives before stockholders even vote on the capital increase, UnionBank’s falls on the day of the vote itself, and even a successful September 30 vote does not instantly put P6 billion into ABS-CBN’s bank account because the amendments and share issuance still have regulatory and other conditions to clear before the subscriptions can be completed. Screenshots from ABS-CBN’s annual stockholders’ meeting on August 19, 2026. ABS-CBN therefore still has to manage the old debt while it waits for the new equity, and the banks are not the only ones waiting. Former employees are still owed retirement and separation obligations after years of retrenchment, while suppliers, production costs, taxes, salaries and other accrued expenses are among roughly P12 billion in trade and other payables sitting on the group’s balance sheet as of June 30. The company has said the fresh capital will be used for working capital, strengthening the balance sheet and other general corporate purposes, but has not disclosed how the P6 billion will ultimately be divided. The fresh money, in other words, already has a line forming for it before it even arrives. Making room The timing captures the unusual place ABS-CBN now finds itself in. On Wednesday morning, stockholders gathered for an orderly, sanitized annual meeting built around the company and ownership structure that existed before the rescue. By afternoon, the board was already preparing for the one that comes after it. The P6 billion buys ABS-CBN something its existing balance sheet badly needs: money without another layer of debt and interest payments. But the company is paying for that breathing room with ownership. For decades, control of ABS-CBN was almost synonymous with Lopez Inc. After 1.64 billion new shares are issued, that will no longer be so simple. September 30 is when the old owners will be asked to formally make room for the new. – Rappler.com Lala Rimando wrote about Philippine business, and managed newsrooms, including Newsbreak, ABS-CBN, Rappler, and Forbes, for over 25 years. She’s now based in La Union, taking care of her mom with dementia, and working on the multimedia biography of the late John Gokongwei. Below are some of the author’s articles on the Lopez family saga: Part 1 | Debt, discipline, and daring: Inside the Lopez Group’s high-risk bets Part 2 | The Lopezes, presidents, and the cost of dissent Part 3 | Lopez vs Lopez: The secrecy fight behind the Razon power deals Who writes the Lopez story? How lawyers, headlines, and ABS-CBN shape a family war EXCLUSIVE: Inside Piki Lopez’s town hall as cousins rally for ABS-CBN How to make yourself very expensive to fire: The Lopez cousins’ war First Gen sat on a P23.5-billion Lopez clause for 60 days, then the family went to war When the ASM has no election: What the Lopez family dispute means for every investor From ‘king’ to ‘steward’: How Piki Lopez answered the Lopez family rift question The business case of the Lopez-Razon gas and hydro deals An Indonesian billionaire wants EDC: The $5-B offer raising the stakes in the Lopez feud The company the Lopezes gave up Meralco for: EDC, from oil crisis child to takeover target Making sense of US firm KKR’s offer on Lopez family’s First Gen