PSE says Calata should have done more to protect investors

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By Arra B. Francia, Reporter

THE Philippine Stock Exchange (PSE) said delisted firm Calata Corp. could have opted to buy back the shares of minority stockholders at a price lower than the book value, if it really wanted to protect its investors.

PSE President Ramon S. Monzon said there is no rule stating that all tender offers must be made at the book value, making it possible for Calata to buy out at least half of its minority shareholders.

“Nobody said that the tender offer price had to be at the book value. If he was sincere with trying to save your shareholder, if the book value is P3…then if you answer for half, then do it, if you really want to do it,” Mr. Monzon told reporters in a press chat last Wednesday.

A tender offer is at a fixed price, but usually at a premium over the current market price. It is also usually contingent on shareholders tendering a fixed number of their shares.

The bourse has officially kicked Calata out of the PSE last Dec. 11, after counting a total of 55 violations of PSE disclosure rules including the so-called black-out rule that prohibits principal officers and directors of a company to trade its shares within a prescribed period.

Some minority shareholders have previously asked the PSE to stop the delisting procedures in order to protect their investments.

Mr. Monzon denied the PSE did not consider the interests of minority shareholders, saying delisting Calata depended on the company’s decision on whether or not to proceed with the tender offer.

The PSE executive added Calata was given the option to voluntarily delist from the exchange.

“The PSE was prepared to voluntarily, not involuntarily, to just voluntary delist Calata if he would do the tender offer. Even though the penalty for his trading violations calls for involuntary, we were going to be flexible,” Mr. Monzon explained.

Companies that voluntarily delist from the PSE may reapply for listing six months after it exits the exchange. Those that undergo involuntary delisting procedures would have a five-year ban, while officers of the company are perpetually banned from joining the board of directors of a company seeking an initial public offering.

“So when he turned down our offer for a voluntary delisting, the delisting had to happen because of our rules. Otherwise, the SRC (Securities Regulation Code) will penalize us for not doing our work as an SRO (self-regulating organization),” Mr. Monzon said.

Asked whether the PSE will also be penalizing the brokers that executed the transaction that led to Calata’s violations, Mr. Monzon said: “I don’t think a broker is responsible for disclosure. That is the responsibility of the company or the compliance officer, but not the broker.”

“The broker is not required to disclose to the PSE or to CMIC (Capital Markets Integrity Corp.) or SEC how it has sold some shares. Kaya disclosure comes from the company, not the brokers,” he added, noting the CMIC is responsible for regulating trading participants.