PSE, SEC spare the rod for San Miguel

MANILA - Diversified conglomerate San Miguel Corporation dodged a trading suspension of its shares after the Securities and Exchange Commission and the Philippine Stock Exchange accommodated its request to delay the submission of a status report.

San Miguel was one of the 16 listed companies that were named in an August 26 memo of the Philippine Stock Exchange (PSE).

The PSE memo said these companies failed to submit their SEC Form 17-Q, a structured report that all listed companies have to comply with every quarter. It’s one of the ways to update investors of the listed companies’ latest financial status and plans.

According to PSE's own rules, listed companies that do not comply with the deadline for submission of the quarterly reports face automatic suspension for a maximum period of 2 months. 

Not once, but twice

The financial report that San Miguel and other listed companies failed to submit covered the April to June 2009 period.

On August 26, PSE spared the rod on San Miguel. In its memo, it specially mentioned that San Miguel’s deadline has been moved to September 1 from August 19.

“The exchange has granted the Corporation’s request to file its Quarterly Report on or before 8:30 a.m. of September 1, 2009 to avoid trading suspension,” PSE president Francis Lim said in the memo.

The following day, August 27, PSE again issued a memo entitled “SMC - Extension to submit Quarterly Report for period ended June 30, 2009.”

Essentially, San Miguel was given an additional 8 hours to submit the report. The memo said that instead of before “8:30 a.m.” of September 1, the new deadline is now “the end of business hours” of that day.

The risk of trading suspension was also moved from the start of trading on September 1 to September 2. Trading starts at 9:30 a.m.

SEC reprieve

The PSE cited an SEC decision as its basis for the second deadline extension for San Miguel.

In an August 24 SEC letter to San Miguel, the capital markets regulator said that based on the Commission’s meeting on August 20, the SEC has “resolved to grant the company’s request for exemptive relief.”

The August 20 meeting of the Commission apparently came a day after San Miguel wrote the SEC to seek for “exemptive relief…from compliance with the requirements….”

SEC, however, did not specify that PSE could further extend the deadline from the start of business hours to the end of business hours on September 1.

The SEC letter merely said that San Miguel is allowed to file the report “on or before” September 1.

Just 5 days

In a published guideline last April, the PSE said companies that could not submit their quarterly reports on time could only be accommodated for another 5 calendar days.

Since the original deadline of submission was last August 14, 2009, the extension of the deadline to August 19 was still in keeping with PSE’s own rules.

However, the new deadline for San Miguel, September 1, means 18 additional days from the original cut-off date.

The SEC letter accommodating San Miguel’s request for a new deadline meant that the conglomerate could break the 5-day deadline extension allowed in the rules of PSE.

The SEC has granted the PSE a Self-Regulatory Organization (SRO) status since 2000. An SRO allows the bourse to implement its own policies and establish penalties on erring stock brokers, traders and listed companies.

The SEC noted that the San Miguel request for an exemptive relief from the rules was “due to the non compliance of the consolidation of the [San Miguel] Group’s results of operations for the period ended June 30, 2009.”

San Miguel has been one of the most active groups in the mergers and acquisitions game since last year.

Since April, San Miguel has been involved in the following:

• accumulation of additional shares in Manila Electric Company,
• sold its 49% stake in its beer unit to Japanese firm Kirin Holdings, Inc.,
• made a bid for (and eventually won) 2 major power plants up for privatization,
• acquired a stake in Liberty Telecoms and Express Telecoms,
• made a bid and had been eyeing a stake in Philex Mining Corp., and
• acquired a stake in the consortium of construction companies involved in Tarlac-La Union highway. 

Suspended

Among the 16 companies that have failed to submit a quarterly update, San Miguel stands out since its shares are actively being traded at the stock exchange.

The shares of the 15 other companies are already on a trading suspension.

These are: Banco Filipino Savings & Mortgage Bank, Export and Industry Bank Inc., Forum Pacific Inc., Gotesco Land Inc., Marsteel Consolidated Inc., Metro Alliance Consolidated Inc., Metro Alliance Holdings & Equities Corp., Mondragon International Philipines Inc., NextStage Inc., Philcomsat Holdings Corp., Philippine National Construction Corp., PICOP Resources Inc., Primetown Property Group Inc., Sanitary Wares Manufacturing Corp., Universal Rightfield Property Holdings Inc., and Wise Holdings Inc. - with research from Olivia Gan, ABS-CBN News