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THE
obvious sign of bad times, it seems, is taking its toll
on the market as shown by what KS Investments Pte. Ltd.
of Singapore, a holding company investing in ship
building, is about to undertake: it is set to take out
of the Philippine Stock Exchange its unit, Keppel
Philippines Marine Inc. (KPM). The Singaporean group did
not state categorically that its departure is certain.
But it was clear from its filing that KPM is on its way
out when its mother company suggested to regulators that
it wanted to own up to100 percent of KPM’s outstanding
shares. KS Investments, of course, has nothing to lose
by buying out the minority stockholders in its unit but
may be, on the contrary, it has only so much to gain; it
would be able to escape the uncertainties that had hit
the market lately, particularly the planned takeover of
the Manila Electric Co. by the government using OPM
Holdings Inc. and compromising the funds of Government
Service Insurance System, which acts as trustee for 1.4
million government workers. The letters OPM stand for
other people’s money. Foreign companies, like foreign
funds, hate the government takeover.
While
delisting may be an option for majority stockholders of
listed companies, letting their companies stay in the
market may be a more logical choice because they could
engage in shares buyback or reacquiring the shares in
its unit. Controlling most shares up to 99 percent of
outstanding is the best way of protecting one’s turf
from outsiders. Buying back shares may effectively
reduce public holdings but it will in no way deprive a
listed company of tax perks or reduced tax. Even
Philippine Long Distance Telephone Co. has joined the
buyback bandwagon. As of May 9, 2008, it had reacquired
371,260 shares.
As the
ongoing tender to buy, if successful, will result in KPM
having one stockholder with five or so shares held by
its nominees, there is no reason for it to stay in the
market since it won’t have publicly-owned shares that
will be available for trading. At the time of the filing
on April 10, 2008, KS Investments already owned 1.859
billion KPM shares, or 93.196 percent of 1.994 billion
outstanding shares and still wanted to buy the remaining
135.706 million shares, or 6.804 percent, for which it
allocated P339.266 million at P2.50 per share. (The
results of the computation may not be exact due to
rounding of figures. An updated report placed KS
Investments ownership of 1.867 billion KPM shares, or
93.626 percent. The increase resulted from KS
Investments’ buying in the open market.)
Businessman Henry Sy Sr. may be among the small
stockholders who may miss KPM. As of December 31, 2007,
his holdings along with those of SM Development Corp. SM
Investment Corp. Sysmart Corp. and Shoemart Inc.
equivalent to about 8 percent, entitled the family to a
seat in KPM’s eight-man board, which it lost after
selling out to KS Investments. As of March 31, 2008, the
Sys were no longer in KPM’s list of stockholders.
****
What’s
in a name?
Businessman Lucio Tan wants to keep Philippine National
Bank (PNB) as the corporate name of the surviving entity
in merging it with Allied Banking Corp. There is no
problem with the merger as he controls both banks but
with the rules on company registration with the
Securities and Exchange Commission.
That’s
why he should hire the best lawyers in town to
effectively argue that the marriage between PNB and
Allied Bank should not prevent him from owning the name.
He has Philippine Airlines, which he bought from the
government several years ago, as a precedent.
An
existing policy on company registrations prohibits the
use of Philippines and\or national in a corporate name,
which are both present in PNB. The prohibition is
intended to avoid confusion. An entity using
Philippines
and/or national may be identified as being owned by the
government. Land Bank of the Philippines and Development
Bank of the Philippines have the right to use
Philippines because both are owned by the government.
****
Note 1.
Pilipino Telephone Corp. (PLDT, a subsidiary of Smart
Communications Inc., which, in turn, is a subsidiary of
Philippine Long Distance Telephone Co., has long been
out of the hole. From a losing company, Piltel is now a
money maker and contributes to PLDT’s profitability. It
reported retained earnings of P2.904 billion as a result
of net income of P2.457 billion in the first quarter of
2008 on revenue of P4.196 billion.
Note 2.
The
small farmers do not know how to complain loudly as
talkative politicians do to be noticed. They prefer to
suffer in silence every planting season. Consider this:
from 1,200 last year, the price of a bag of fertilizer
went up to P1,500. In addition, they have to contend
with paying P1,000 per hectare in irrigation fees every
cropping season. This means farmers who heeded the
government call to plant a third crop for will have to
pay additional P1,000 per hectare when they are not
certain about getting good harvest. By the way, many of
the farmers are selling only as the need for money
arises. Will the government raid their warehouses for
hoarding? |
