• Betting on Alterra

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    EMETERIO SD. PEREZ

    EMETERIO SD. PEREZ

    JOSE MARIA ESPIRITU, a reader of The Manila Times, wrote to share the story of his luck a few weeks ago when he sold his RPL shares. The three letter-acronym stands for iRipple, which has since been renamed Alterra Capital Partners Inc., which uses ALT as its market symbol.

    “I was able to get a good return on my investment because it suddenly jumped from the normal 52-57 peso range,” Mr. Espiritu emailed Due Diligencer on Nov. 26.

    Mr. Espiritu kept monitoring RPL’s climb, which reached P85, but “I was able to sell mine at P78.”

    To verify the reader’s claim, I went over the filings of and trading on Alterra shares. A drastic fall by so much — that is, from P86 on Nov. 11 to P4.49 the following day — obviously resulted from the change in its par value.

    As RPL, iRipple shares had a par value of P1, which was changed to P0.05 per share as ALT. The reduction in par value increased Alterra’s outstanding shares to 311.38 million from 15.57 million. Thus, if Mr. Espiritu holds 100,000 RPL shares, he would end up owning 2 million ALT shares.

    Price surge
    IT is up to the market monitoring teams of the Securities and Exchange Commission (SEC) to act on Mr. Espiritu’s observation of the trading on Alterra Capital. As with SBS Philippines Corp., which was the subject of previous columns, I would not preempt the SEC and Philippine Stock Exchange (PSE) on ALT’s sudden price jump. The stock opened on Nov. 9 at P57.80, hit a high of P86.40, and closed the session at P85.95. This trend lasted until Nov. 11 when ALT closed at P86.

    Was there any unusual trading on Alterra? This is a question that only the SEC and PSE people could clarify. Instead of asking the company’s compliance officer to explain the “unusual trading” on ALT, their monitoring experts may want to closely look at the stock’s market performance, particularly its surge on Nov. 9 to P85.95 from P57.80.

    Hasn’t PSE’s Capital Markets Integrity Corp. (CMIC) learned a lesson from its previous inquiries regarding the dramatic climb or plunge in a stock’s price? As usual, Alterra told them that “the company is unaware of any undisclosed information that could have triggered said unusual movement.”

    Ownership profile
    IN a public ownership report as of Oct. 7, Alterra listed only two significant stockholders. Conrado Rafael C. Alcantara and Alfonso S. Anggala own 7.08 million shares, or 45.5 percent, and 5.29 million shares, or 33.99 percent, respectively. The public held – and still hold today – 3.19 million shares, or 20.5 percent.

    On the other hand, Alterra’s list of top 100 stockholders as of Sept. 30 showed only PCD Nominee Corp., a corporate stockholder and eight individuals.

    PCD Nominee holds 15.5 million shares, or 99.9 percent, and 8,600 shares, or 0.05 percent, for foreigners. MJ Soriano Trading Inc. owns a 1,000 shares, or 0.006 percent. Completing the top 100 stockholders were eight individuals who were credited with a nominal share each.

    In turn, 28 stockbrokers hold the PCD-held Alterra shares, with Star Alliance Securities Corp. credited with 13.93 million, o 89.5 percent.

    The ownership profile of Alterra is based on its outstanding capital stock of 15.5 million shares with par value of P1. The company’s amended charter, reflecting its 311.38 million outstanding shares with par value of P0.05, was approved by the SEC only on Oct. 29.

    (For the information of Mr. Espiritu and other public investors interested in knowing more about Alterra, you may also refer to a previous piece which appeared in this space on Sept. 4 titled “From iRipple to Alterra,” in which I wrote about the plan of the Alcantara-Angala group to use the company as a holding company.)

    As a holding company, the public plays a vital role in providing Alterra with the capital it needs to acquire subsidiaries or form its own units. They know or should know or should have been told that their company would raise money to engage in new investments, which it could do by increasing its authorized capital.

    With the change in its par value, Alterra’s authorized capital stock increased from 20 million shares to 400 million, of which 311.38 million shares are issued and outstanding. Only 88.62 million Alterra shares remain unissued, worth P4.43 million at P0.05 per share, which would not be enough to serve as initial capital of a new subsidiary or buy another company.

    As of now, Alterra is undercapitalized to fully become a holding company. Its majority owners’ plan is for their company to make it to the big league dominated by the Zobels, the Gokongweis, the Sys – not necessarily in that order — and a few others.

    To convert Alterra to a holding company, the Alcantaras and the Anggalas will need to increase Alterra’s authorized capital to P2 billion. As a general rule, the SEC requires that 25 percent of authorized capital should be subscribed, of which 25 percent should be paid up. The question is where Alterra would get that much money. If the Alcantara-Anggala group were to invite outside investors for additional capital, they should not forget to ask if anyone among the company’s public stockholders would be interested in exercising their preemptive rights.

    esdperez@gmail.com

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