THE Philippine Stock Exchange, Inc. (PSE) is positive it can secure clearance from the Securities and Exchange Commission (SEC) for its acquisition of the Philippine Deposit System Holdings Corp. (PDSHC), after it conducts a stock rights offering next month.
In a disclosure on Monday, the PSE said the country’s corporate regulator approved its listing application for the P3.16-billion stock rights issuance on Jan. 25.
“With the approval, the company is confident that it will be able to fully comply with the Securities Regulation Code requirement to reduce ownership of broker shareholders to 20%,” the PSE said.
The PSE will be offering up to 11.5 million stock rights to existing shareholders at P275 each next month. Proceeds will be used to fund the acquisition of PDSHC, and working capital requirements. The company has already obtained a loan facility of up to P1.15 billion each from BDO Unibank, Inc., Metropolitan Bank & Trust Co., and Bank of Commerce for the acquisition.
The entitlement ratio for the offer has yet to be disclosed.
“The company has in place several layers of control in the system that will monitor the level of ownership and restrict purchases to maintain the ownership level at 20%,” the PSE said.
Bringing down broker ownership in the PSE to less than 20% is key to getting the SEC’s approval for the transaction, as Rule 33.2 (c) of the Securities and Regulation Code states that “no single industry or business group shall beneficially own or control, directly or indirectly, more than 20% of the voting rights of the Exchange Controller.”
PSE Chairman Jose T. Pardo said last week the stock rights offer would bring down ownership of trading participants in the PSE to 19%.
“Thus, the company is hopeful that it will obtain the exemptive relief from the SEC soon, which will then pave the way for the finalization of the acquisition of additional shares in PDSHC,” the bourse operator said.
BDO Capital Investment Corp. and First Metro Investment Corp. have been tapped to arrange the offering.
State-run Land Bank of the Philippines (Landbank) has also expressed its intent to buy a majority stake or at least 66.67% in the fixed-income bourse. The bank’s board of directors approved the plan last week.
Finance Secretary Carlos G. Dominguez III backed Landbank’s move, saying the PSE’s inability to secure exemptive relief has hampered the growth of the country’s capital markets.
Shares in PSE were up 0.82% or P2 to close at P247 apiece on Monday. — Arra B. Francia