THE outstanding capital stock of Prime Media Holdings Inc. totaling 748.49 million shares are divided into 698.931 million common shares and 49.559 million preferred shares. Both classes have par value of P1 per share.
A list of stockholders dated Sept. 30, 2014 shows that the majority ownership of the company’s outstanding preferred shares, which are non-voting, is held by Anthony Salim, who owns 32.232 million preferred shares. That represents 66.377 percent of the total 49.559 million preferred shares and 4.306 percent of 748.49 million outstanding capital stock. (The filing also shows Albert del Rosario holds the shares ITF, or ‘in trust for,’ Anthony Salim.)
(Recomputed to get the percentage equivalent of Salim’s holding, the result showed 65.038 percent of outstanding preferred shares.)
The same ownership posting also shows the other significant stockholders, who hold 610.734 million common shares equivalent to 87.37 percent of 698.931 million outstanding common shares, are the following: RYM Business Management Corp., 298.949 million shares, or 42.77 percent; Metro Tagaytay Land Co., 218.099 million shares, or 31.20 percent and Neo Oracle Holdings Inc., 93.685 million shares, or 13.40 percent.
Prime Orion Philippines Inc. (POPI) reported a deficit of P157.665 million as of March 31, 2015, but has additional paid-in capital (APIC) of P829.904 million. APIC represents the difference when a company sells shares at a premium, meaning the price per share is above par value.
This simply means from the issuance of 2.066 billion common shares, POPI raised a total capital of P2.896 billion, which is the sum after adding the issued shares at P1 par value and the company’s APIC of P829.904 million.
With its APIC, POPI still has room for losses as it did in the first quarter of this year. Its financial filing covering the first quarter shows it lost P36.513 million in the first three months of the year, against a net income of P100.626 million in the same period in 2014.
As a result, POPI’s stockholders lost P0.015 per share against P0.043 earnings per share in the first quarter of 2014.
APIC under equity
As an entry under equity, additional paid-in capital (APIC) plays the role of “enforcer’ when a company is about to go under. The word inside the pair of parentheses is used here for lack of a more descriptive word. Unless, of course, some readers would suggest something that would be easily understandable by laymen and not exclusive to certified public accountants.
APIC has be en used by the Securities and Exchange Commission (SEC) in wiping out deficits of a company by applying it against accumulated deficits. For a time, it was even declarable as stock dividend—not cash, of course.
As time went by and as SEC changed leaderships, certain policies needed drastic overhauling. One of these was the return to stockholders of APIC, which was deemed wrong by SEC officials because the amount of APIC was part of the stockholders’ payments in their acquisition of shares.
With this new regulatory consideration, the SEC has stopped allowing the distribution of the amount of APIC that a company reported under equity as stock dividend. Simply put, the SEC has limited the use of APIC only in eradicating accumulated deficits that a company has piled up as a result of continuing losses. In short, APIC would become an effective neutralizer of losses only when a company is about to collapse.
Something is wrong with the ownership profile of POPI that the company’s lawyers have to explain the filing’s attribution of ownership to the public. Is it possible for the public to end up as POPI’s majority stockholders but are never represented on the board?
In a public ownership report, POPI listed two significant stockholders. Guoco Assets Philippines Inc. and Genez Investments Corp. hold 451.256 million shares, or 19.06 percent, and 267.554 million shares, or 11.3 percent, respectively.
Such ownership profile at that time made public investors POPI’s majority stockholders. with their holdings totaling 1.594 billion shares, or 67.34 percent.
POPI’s ownership posting shows how a listed company can try to make it appear that it is more public than others when in fact it is not. This kind of disclosure, however, is not POPI’s monopoly. Several other listed companies are doing similar analyses of their ownership profile but are never noticed by the five members of the five-person regulatory body of the Securities and Exchange Commission.
Are SEC Chairperson Teresita Herbosa and the commission’s four other commissioners too busy with other duties that they never bother to even take a glimpse at any of the ownership filings submitted to them by listed companies?