PSE: Firms can’t unilaterally cancel stock rights offering

Philippine Stock exchange inc. (PSE) President Ramon S. Monzon said over the weekend that a company cannot just cancel its approved stock rights offering (SRO) if there are no takers as the underwriter has committed to purchase the offered shares.

Monzon made this remark during the Pse’s investment Expo ‘22 where he was asked about a listed firm’s sro which appears to be undersubscribed.

“Even if it does not sell, the underwriter has a firm commitment to pick up those shares,” he said.

While the name of the company concerned was not mentioned, only dito CME holdings Corp. has an ongoing stock rights offering for common shares worth P8 billion.

dito has recently received regulatory approval to extend its sro through February 2, from the original January 18 deadline, to “allow more qualified investors to obtain additional shares at an attractive discount.”

the company said “the extension was granted due to numerous requests from shareholders who were unable to subscribe to the offering or receive their sro kits on time due to logistical difficulties brought about by the surge of Covid-19.”

dito is offering a total of 1.64 billion common shares, priced at P4.88 per share. the offer price is an 18.4 percent discount from the closing price as of January 13 and was set at the bottom of its indicative price range.

DITO shares closed Friday at P5.09 apiece.

Monzon said the bourse is mulling over the steps that should be taken to address the problem, noting that the PSE had adjusted the reference price for the stock after the rights offering ex-date.

“What are we going to do? are we going to adjust the price [again]? how about the investors who sold at a lower price because they thought they would get additional shares from the sro?”

“these are the things we are trying to iron out actually today [saturday]. We need to be able to determine because markets open on Monday and we need to know [what needs to be done],” Monzon said.

later on saturday, the PSE released an announcement that dito decided to defer its sro as “management has determined that current market conditions are less than ideal to pursue the offering.”

in the same letter, dito said that it “shall refund any and all subscription payments made by any existing shareholder or qualified institutional buyer during the offer period of the stock rights Offer.”

the PSE, however, said in a scathing statement that dito’s decision “should not be construed as an approval by the Exchange of the deferment of the offering.”

“Furthermore, this is without prejudice to any regulatory action that the exchange may pursue in order to ensure full compliance with the applicable rules and for the protection of the investing public consistent with the mandate of the exchange, as a self-regulatory organization, to maintain a fair and orderly market,” the PSE said.

“the exchange disclaims any liability arising from, or in connection with the foregoing matter.”

dito President Eric r. alberto said the company is raising P8 billion via the sro. the proceeds will be used to fund its telco services all over the country in fulfillment of the technical audit, and to “fulfill its own mission to be a compelling and a competitive alternative telco in service of the Filipino public.”

dito owns 54 percent of dito telecommunity and operates three digital companies in media, communications, entertainment and information technology.

these include unalytics, which provides managed analytics services; acuity Global, which curates media properties across platforms and provides media planning and buying; and luna academy, an online education platform aimed at equipping users with future-ready skills, credentials and certificates.