PSE plans another share buyback
THE PHILIPPINE Stock Exchange, Inc. (PSE) is planning to launch another share buyback before the year ends in line with reducing broker ownership in the local bourse to 20%.
PSE President and Chief Executive Officer Ramon S. Monzon told reporters last week the stock market operator is doing a second round of compliance with the Securities Regulation Code through a directed buyback of shares.
“I just need to buy back about one million shares for the second round,” Mr. Monzon said.
The Securities Regulation Code limits to 20% the ownership and control of the PSE by an industry or business group. The PSE has been trying to comply with the law for years, but Mr. Monzon said brokers still own 23.87% of the local bourse today.
Last month, the PSE was able to complete buying back P445.10 million worth of shares from brokers when it purchased 2.419 million shares priced at P183.93 each.
The roughly 1 million shares it will be buying back for the second round will cover about 0.47% of the excess 3.87% owned by brokers. The remaining 3.4% is held by one broker, First Metro Securities Brokerage Corp., which the PSE is in talks with for a possible divestment plan.
He explained the First Metro shares were absorbed by the broker “unwillingly” due to its failure to place all its allocated shares to investors when the PSE conducted a stock rights offering earlier. “Since they have a firm underwriting agreement with PSE, they had to absorb the shares,” Mr. Monzon said.
The PSE initially planned to do a swapping of common shares to non-voting preferred shares, but the Securities and Exchange Commission (SEC) warned this couldn't be approved because holders of such shares would still have rights to vote on certain corporate matters such as incurring of debt and increasing of authorized capital stock.
Mr. Monzon also said they cannot compel First Metro to sell its shares as this would translate to about P200 million in losses for the broker. “They absorbed the shares of P250 to a share, which was the stock rights offering price. As you know now, the price of PSE shares is P180. So ang laki ng lugi na ng First Metro (First Metro is losing so much),” he said.
“So we're trying to find a way how to address that First Metro block. Kasi other than that, complied na kami eh (we're already compliant),” the PSE top chief said. “I have a deadline na (that) by the end of the year, we should be complied so we can move forward with our plans.”
The PSE has several applications pending at the SEC, such as the guidelines for short-selling transactions and a listed derivative products plan, among others, which haven't been moving as planned. While Mr. Monzon refused to categorically link the delays to the PSE's failure to comply with the broker ownership requirement, he said the PSE wants to be “perceptive” about the situation.