IF I were among the public investors caught holding certificates of shares in Primetown Property Group Inc. (PPGI), I would have given up hope a long time ago of recovering even a few centavos per peso of my investment.
How could I even entertain the idea of someday either recouping or cutting my losses when trading in PPGI shares remains suspended? Besides, no one knows what’s cooking inside the boardroom of the property company that had raised P1.3 billion from the public by selling the equivalent of 25 percent of outstanding shares in an initial public offering (IPO) in 1995.
Of course, Primetown’s postings on the website of the Philippine Stock Exchange assure investors that it has not been remiss in protecting the company. As a matter of fact, it continues searching for new capital because it could not possibly borrow more due to its huge deficit.
Primetown’s IPO was very successful. The IPO resulted in additional paid-in capital (APIC) of P908.8 million which, however, would not be enough to wipe out PPGI’s deficit, which has ballooned to P2.2 billion as of Dec. 31, 2012.
APIC represents the premium over par value in the sale of shares. In the case of Primetown, it could at least help in easing the burden of carrying too much deficit in its books.
Luckily, I am not one of the public who, as of Oct. 17, 2014, owned 179.8 million Primetown shares, or 20.8 percent of 865.8 million outstanding shares. Had I invested in the company’s IPO in 1995 and still hold those shares now, my investment of P13.83 per share would now be worth only P0.37 per share. What a loss!
Where did the P1.3 billion that Primetown raised from its IPO go? The company blames the Asian financial crisis in 1997 for its downfall, as market analysts and practically everyone else did. Apparently, the once promising property company claimed it was a victim of the currency debacle that hit Asia.
After 17 years, Primetown is still heavily burdened by its accumulated losses in the past. Small investors are helping the three Yap brothers, who hold a combined 36.7 percent direct ownership, shoulder these losses.
The question that the small stockholders of Primetown might want to ask is: How many years more would they have to suffer? Is there hope for a corporate savior to come and rescue it and help it wipe out its more than P2-billion deficit?
Let us review Primetown’s financials and let the public make their own conclusion.
In its latest financial filing, Primetown reported a P2.5 billion deficit as of Dec. 31, 2012. Deduct from this its capital stock valued at P865.8 million and its additional paid-in capital of P908.8 million, which are among the deductible items, and you have a capital deficiency of P737.5 million. If you can describe this as good news because the capital deficiency is way below P1 billion, then the bad news, which could be the bigger problem, is that Primetown had, as of Dec. 31, 2012, current assets of P351.9 million against current liabilities of P1.2 billion. It is not a pleasant financial ratio to consider.
With such unattractive numbers, can Primetown succeed in finding the corporate messiah that it has long been looking for?