Paying debt with other people’s money

proceeds,” which it “will charge against the IPO proceeds in the last quarter of 2015.”

This “deferment” should bring the total “IPO-related expenses” of SBS Philippines to P64.85 million.

Timely disclosure

Perhaps, SBS should have explained to the public the difference between reporting now and reporting later when numbers are supposed not to change at all. Has anyone heard about mathematics being a perfect science?

Re- computation of the num showed that the company spent a total of P64.85 million and not only P42.75 million in “IPOrelated expenses” To the public, delaying some deductible expenses for the sake of accounting convenience would not be fair to them.

Since SBS also included P22.1 million as “IPO-related expenses,” it should have made a separate computation to show the effect of said amount NOW and not later, which would be in the last quarter of 2015.

The outsiders who are not privy to the board but who nevertheless bought SBS shares require more details of how the company used the proceeds raised from the public offering. Did the company sell shares to them so that it could use their money to pay BDO Unibank Inc. P282.9 million including in not state the principal amount.

Auditors’ report

Punongbayan & Araullo is the external auditor of SBS Philippines which analyzed the company’s - note to its report, it reported that “…the offering proceeds from the IPO are not immediately applied the offering circular.”

Really? Why didn’t SBS use the net proceeds of P829.3 million for, among others, “product expansion,” as it said so in its posting on the website of the Philippine Stock Exchange? It would appear to the public that the company needed the money only to be able to pay percent interest per annum, “carried higher interest rates compared to other credit facilities.”

The P& A audit report listed some of the projects lined up from SBS’ sale of shares. Among them was “the acquisition of a 19,373- square meter industrial property located at the west side of the National Road within Barangay Tunasan, Muntinlupa City.”

Money market placements

If the public stockholders of SBS Philippines are interested to know where their money went, rely on P&A to provide them the answer. “As of Sept. 30, 2015,” the external auditor said, “the remaining balance of the offering proceeds was invested in short-term money market placements.” That’s a lot of money to play with in over a year.

In April last year, SBS Philippines sold to the public 420 million shares at P2.75 each. From this public offering, it grossed P1.15 billion. Minus “IPO-related expenses” of P42.75 million, the company had P1.11 billion in net proceeds. After paying BDO P282.9 million, it still had P829.3 million left.

The public investors should not be satisfied with SBS’ own presentation because they should have been told that the company had yet to deduct P22.1 million, which it chose to defer to the “last quarter of 2015.” By proceeding with their own computation, they would arrive at net IPO proceeds of P807.22 million.

Here are two questions that the public stockholders of SBS should ask: How much of the IPO money did it invest outside the company? What happened to the purpose of the offering?

Finally, the public should wait for SBS’ financial filing for the third quarter of the year. They would probably be interested to know how much their money earned from the company’s money market placements.

esdperez@gmail.com.