PSE shelves preferred shares issue

Published October 13, 2019, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The Philippine Stock Exchange (PSE) is not longer pushing through with its planned preferred share issuance and is instead undertaking a second round of share buyback in its continuing bid to reduce stock brokers’ stake in the bourse to 20 percent or lower.

Ramon S. Monzon
PSE President and CEO Ramon S. Monzon

In an interview, PSE President Ramon S. Monzon said they have decided against issuing 3.5 million non-voting preferred shares because holders of these securities actually get to vote on certain corporate matters.

The PSE is trying to comply with provisions of the securities law which puts an ownership cap of 20 percent of the voting stock for any industry, including stock brokers.

After the P445-million share buyback concluded last month, Monzon said the brokers’ stake in the PSE is now down to 23.8 percent. Thus, they plan to talk to more brokers and convince them to sell their PSE shares.

However, Monzon said the biggest obstacle now is how to get First Metro Investment Corporation (FMIC) to divest shares in PSE equivalent to an interest of about 3.4 percent.

He explained that these shares were left over from the stock rights offering last year which was also meant to dilute stock brokers’ shareholdings.

FMIC was one of the underwriters of the issue and had to buy the PSE shares that were not subscribed by shareholders. The firm also owns a stock brokerage.

While the SRO price was P252 per share, the market price of PSE is now down to P175 apiece, translating to a potential loss of almost P200 million for FMIC.
Thus, Monzon said they have yet to figure out how FMIC can divest these shares.

“We’re looking at ways to address it. We’re exploring other options to address that. We keep telling First Metro how can we work together so you can divest,” he said.

Aside from the FMIC shares, Monzon said they need to buyback only about 0.34 percent or 900,000 to 1 million PSE shares from brokers and they will already be compliant with the ownership cap.