By Arjay L. Balinbin, Senior Reporter

GMA NETWORK, INC. is buying back all the Philippine Deposit Receipts (PDRs) it had sold to foreigners to protect their investments after lawmakers voted not to renew the franchise of ABS-CBN Corp., a rival media company that issued similar financial instruments.

In a disclosure to the stock exchange, Tuesday, the listed media company said its board of directors had approved to “purchase and acquire” the PDRs issued by GMA Holdings, Inc. to foreigners at P4.55 per share or lower “effective immediately and up to Oct. 31, 2020.”

The media company said the decision is “a measure of protection of the investments held by non-Filipinos in the PDRs,” which could “be affected by the findings and recommendations of the Technical Working Group as adopted by the House of Representatives Committee on Legislative Franchises on the application for a new franchise of ABS-CBN Corp.”

The PDRs will be converted into common shares after the acquisition. A PDR grants the holder the right to the delivery of sale of the underlying share, according to the Philippine Stock Exchange.

In a document, GMA Holdings said that on July 30, 2007 and Aug. 21, 2007, it issued 822,115,000 and 123,317,000 PDRs relating to GMA shares, respectively. “The total number of issued PDRs is 945,432,000 for a consideration of P8.50 per share or P8,036,172,000.”

In March, GMA Holdings said only 13.02% of its PDRs were held by non-Filipino investors, which went down further to 10.89% in June.

In June, one of the issues raised at the joint hearing of the Committee on Legislative Franchises and the Committee on Good Government and Public Accountability on the application of ABS-CBN for a franchise renewal was whether the media company violated the Constitution when it sold PDRs to foreigners, which allegedly allowed non-Filipinos to own the network.

The 1987 Constitution states that media companies should be 100% Filipino-owned.

Nueva Ecija 2nd District Rep. Micaela S. Violago has filed House Resolution No. 984 seeking an inquiry into the PDRs issued to foreigners by all the major broadcasting companies in the country.

GMA Network said in a statement that its issuance of PDRs was “done in compliance with the regulations of the Securities and Exchange Commission and of the Philippine Stock Exchange.”

Luis A. Limlingan, head of sales at Regina Capital Development Corp., said by phone the network’s action did not have much impact in terms of shareholder reaction.

He added that the move would not have implications on the majority of investors.

“For listed companies, not all have PDRs to begin with, and usually this affects broadcast companies,” he said.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said via e-mail: “The move could help GMA avoid possible issues that could come out as the House Committee on Legislative Franchises adopts the recommendation to investigate the issuance of PDRs of companies required by the law to be 100% owned by Filipinos. So it can be seen as something positive for GMA.”

The network announced on Monday the appointment of Regie C. Bautista as senior vice-president for corporate strategic planning and business development.

Ms. Bautista is also GMA Network’s concurrent chief risk officer and head of program support.

On Tuesday, shares in GMA Network slipped 0.40% to close at P4.99 apiece.