PEPSI-COLA Products Philippines, Inc. (PCPPI) has completed the sale of P2.21-billion worth of shares to Lotte Chilsung Beverage Co. Ltd., which will result in a breaching of the minimum public ownership requirement of the Philippine Stock Exchange, Inc. (PSE).
In a disclosure to the stock exchange Thursday, the listed company said the South Korean conglomerate successfully bought 1,132,950,431 shares in PCPPI at P1.95 each through a tender offer.
The shares are equivalent to 30.7% of PCPPI’s total issued and outstanding shares, and therefore will result in a reduction of its public ownership to 2.1%.
The PSE requires that publicly listed companies have a minimum public float of 10%. Following PCPPI’s block sale, the PSE implemented a trading suspension on its shares “due to (its) failure to comply with the 10% minimum public ownership requirement.”
PCPPI said it will disclose in the future how it will deal with complying with the PSE’s minimum public ownership requirement.
When Lotte announced its tender offer plan of PCPPI shares in December, it said it wasn’t planning to voluntarily delist the company from the local bourse.
“In the event that PCPPI will no longer be compliant with the minimum public ownership requirement following the completion of the tender offer, trading of PCPPI shares will be automatically suspended by the PSE for a period of six months and, if during the said period, PCPPI is still not able to comply with the minimum public ownership requirement, then delisting will follow thereafter,” Lotte said in its tender offer report.
“If PCPPI is delisted, its common shares will no longer be traded on the PSE and this could affect investors’ ability to liquidate their investments. Also, any capital gains generated from their subsequent sale or transfer will be subject to the prevailing capital gains taxes. Subsequent sale or transfer will also be subject to documentary stamp tax,” it added.
But PSE Chief Operating Officer Roel A. Refran said PCPPI may still raise its public float to 10% to comply. “They may transfer (private placement) shares to a non-public shareholder to bring up the 2.1% float to at least 10%,” he told BusinessWorld through text.
Lotte currently holds a controlling stake in PCPPI. After the transaction, PCPPI said it will remain the exclusive Philippine bottler of PepsiCo, Inc.’s beverage brands, namely Pepsi, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Sting and Aquafina. — Denise A. Valdez
