4 FirstPac firms opt to distribute $502-M cash dividends instead of stock

Emeterio Sd. Perez

Emeterio Sd. Perez

THE four listed companies that are closely identified with Indonesian-controlled First Pacific Co. Ltd. would rather distribute cash instead of stock dividend that in the first six months of 2014 alone, they distributed to stockholders cash dividends totaling P54.273 billion, or $1.262 billion (at P43 to a US dollar). Of these dividends, P21.592 billion, or 39.786 percent, went to their foreign stockholders.

A company distributing stock dividends would have used its retained earnings to boost its capital. It could have kept its surplus, which is an accumulation of net profits, for operations.

In US dollar terms, the foreigners’ take would be equivalent to $502.174 million. If this had been remitted to their headquarters back home, the amount would mean that that much foreign exchange left the Philippines during the period.

The foreign exchange loss of more than a half-billion dollars happened only in the first half of 2014. How much more does the country stand to lose in the second half of the year? Has anyone in government looked into the country’s dollar drain in the previous years?

First Pacific, which is based in Hong Kong, is only one of the foreign conglomerates that invest in public companies. It is a significant stockholder of Philippine Long Distance Telephone Co. (PLDT), Manila Electric Co. (Meralco) and Philex Mining Corp. Its listed holding company is Metro Pacific Investments Corp.

In an ownership filing of Philex, First Pacific is listed as the direct owner of 37.824 million shares, or 0.77 percent. It also indirectly owns 481.191 million shares, or 9.75 percent, thru Kirtman Ltd. and Maxella Ltd., which are both British companies, which own 242.011 million shares and 239.480 million shares, respectively.

The two British companies are among the foreigners who own 1.747 billion Philex shares, or 35.364 percent, which is below the 40 percent-ownership limit for foreigners.

Translated into dividend, this means that foreigners received 35.364 percent, or P87.356 million of P247.002 million at P0.05 dividend per share, that Philex paid on March 26, 2014. At the exchange rate of P43 to a dollar, foreigners could have remitted $2.032 million dollars.

(But if you go by Philex’s audited financial statement, you would notice that the company’s unappropriated retained earnings dropped to P4.129 billion as of Dec. 31, 2013 from P13.578 billion as of Dec. 31, 2012. Would a big drop of P9.449 billion mean the mining company had distributed that much in cash dividend in 2013? If it did, then foreigners’ holdings of 35.364 percent would be equivalent to P3.342 billion, or at P43 to a dollar, $77.710 million).

How about the three other listed companies in which foreigners are also heavily invested?

As of June 30, 2014, an ownership filing showed that foreigners owned only 44.958 million shares, or 3.989 percent, of the outstanding common shares of Manila Electric Co. Apparently, Beacon Electric Asset Holdings Inc., which holds 506.724 million shares, or 44.958 percent, is Filipino.

With this ownership profile, Meralco is almost pure Filipino. A foreign ownership of 3.989 percent would mean less dollar repatriation. With the company’s dividend distribution of P12.36 per share, or a total dividend payout of P13.931 billion, of which P5.91 per share, or P6.661 billion would be paid on Aug. 25, 2014, foreigners would receive P5.557 million in cash dividend, or $129,232 at P43 to a dollar.

Metro Pacific Holdings Inc., which is a Filipino-controlled corporation, is the majority stockholder of Metro Pacific Investments Holdings Corp. (MPIC). As of June 30, 2014, it owned 14.523 billion shares, or 55.77 percent. PCD Nominee Corp. is MPIC’s second biggest stockholder. As stockholder on record, PCD holds 8.369 billion shares, or 32.14 percent, for MPIC’s foreign beneficial stockholders.

In a recent filing, MPIC reported the declaration of P0.048 dividend per share, of which it will pay P0.026 per share on Sept. 24, 2014. It paid P0.022 per share paid on April 30. These dividends totaled P125 million based on 26.042 billion outstanding shares.

Since foreigners owned 32.14 percent of MPIC’s outstanding common shares, they would get a share of P40.175 million from the total dividend, or $934,302.

If you go by the public ownership report, Philippine Long Distance Telephone Co. is still a Filipino-controlled corporation. As of June 30, 2014, the list showed foreigners owning116.002 million common shares, or 53.69 percent, but the percentage equivalent reported was 17.42 percent of 666.056 million outstanding common and preferred shares.

As of June 30, 2014, PLDT had retained earnings of P17.899 billion, down from P22.968 billion, or a reduction of P5.069 billion. The company’s recent dividend declarations came in three tranches: P69 per share to be paid on Sept.26, 2014, while stockholders owning common shares received dividends of P54 and P62 per share on April 16, 2014.

The three dividends totaled P185 per share, or a total of P39.970 billion: P14.908 billion at P69 per share; P11.667 billion at P54 per share; and P13.395 billion at P62 per share. The computations were based on 216.056 million outstanding common shares.

Since foreigners control 116.002 million PLDT common shares, or 53.691 percent of outstanding, then they should have gotten P21.460 billion of the total dividend payout of P39.970 billion. By dividing the foreigners’ share from the total by P43, you would get this result: $499.078 million in exodus of foreign exchange if these stockholders were to repatriate the returns on their investments in listed companies. Next piece: PLDT’s unique ownership profile and dividends.



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1 Comment

  1. Mr. Perez, I admire your article. I hope your Congress will address CHACHA change carefully. I wish SSS and GSIS have invested in these companies to benefits it’s members.