DITO CME trading halted after stock rights offer cancellation

Art Fuentes and Jessica Fenol, ABS-CBN News

Posted at Jan 31 2022 03:23 PM | Updated as of Jan 31 2022 11:48 PM

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MANILA - The Philippine Stock Exchange halted the trading of DITO CME Holdings Corp shares on Monday after the company announced over the weekend that it was canceling its stock rights offer.

Shares in other companies owned by Dennis Uy, DITO CME’s biggest shareholder, meanwhile fell in Monday’s trading, in contrast to the rise of other listed companies. 

The PSE said it has ordered DITO CME to submit a full and comprehensive disclosure on its scuttled share sale "within the day."

"In view of the materiality of the foregoing information and pending submission of the comprehensive corporate disclosure, the Exchange will implement a trading halt on the shares of DITO starting 9:00 a.m. today, January 31, 2022," the PSE said. 

In a statement dated Jan. 29, DITO CME said it had notified both the Securities and Exchange Commission and the PSE of its decision to cancel the stock rights offer. 

“Due to less than ideal market conditions we decided to postpone the SRO. In lieu of this capital-raising exercise, we are studying several alternative financing proposals recently made available to us which we see to be more value-enhancing to our shareholders,” said DITO CME President Ernesto Alberto.

The company, which holds controlling stake in third telco DITO Telecommunity, earlier said it planned to raise P8 billion from the share sale to fund the telco’s expansion. 

DITO CME even asked for an extension of the rights offer to Jan. 25 from Jan. 18 citing “logistical difficulties” brought about by the recent surge in COVID-19 cases. 

But despite running for almost a month, the fundraising effort met weak demand from investors.

The PSE meanwhile said it was not happy over the postponement of the stock rights offer. 

“This should not be construed as an approval by the Exchange of the deferment of the offering,” the PSE said in a statement over the weekend.

“Furthermore, this is without prejudice to any regulatory action that the Exchange may pursue in order to ensure full compliance with the applicable rules and for the protection of the investing public consistent with the mandate of the Exchange, as a Self-Regulatory Organization, to maintain a fair and orderly market,” the PSE added. 

Retail investors are poised to lose due to the deferred activity, COL Financial President and Shareholder’s Association of the Philippines’ trustee Conrado Bate.

“Ang laki ng participation dito. (There is huge participation here) People made so much money. They could lose a lot of money. They are still there and they are hoping the regulators could do their job. We don’t know what they will do,” Bate said.

DITO CME CFO Joseph John Ong said the company was able to secure commitments of over $4 billion in long-term debt from foreign lenders.

"These commitments are more than enough to finance the roll-out of plans of DITO Telecommunity for the last 3 years of our 5-year capital expenditure plans," he said. 

April Lee Tan, COL Financial’s head of research, meanwhile said it was understandable that Udenna, the parent firm of DITO CME, did not come in and buy the unbought shares in the offer. 

“I guess Udenna also has capital budgeting issues, so maybe they don’t have that budget,” Tan said in an interview with ANC. 

She noted that DITO Telecommunity will need huge capital expenditures for the next few years and it will take several years before the telco becomes profitable. 

“It will be difficult if a hundred percent of that will be financed by Udenna, because of course Udenna has other businesses,” Tan said. 

Meanwhile, shares of other firms in the Udenna group fell in Monday’s trading. Uy’s PH Resorts Group Holdings Inc, which is building a casino-hotel in Cebu was down 7.5 percent, Phoenix Petroleum was down 1.6 percent, while Chelsea Logistics and Infrastructure Holdings Corp was down 0.61 percent. 

The PSEi was up 1.51 percent, while the broader All Shares index was up 1.25 percent at the close of trading. 

Asia Nikkei earlier reported that while the assets of Uy’s Udenna Corp ballooned from P31 billion in 2015 to P310 billion in 2020, debt grew even faster, from P22 billion to 255 billion during that period.

-- with a report from Warren De Guzman, ABS-CBN News

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