Filinvest is more public than others

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SOLID Group Inc. has 5 billion authorized capital stock with P1 par value of which 2.031 billion shares are subscribed and paid up. The company’s general information sheet as of June 30 listed Filipinos as owners of 2.019 billion shares, or 99.428 percent and attributed to foreigners the ownership of 11.616 million shares, or 0.57 percent (0.572 percent).

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Seven stockholders owned 1.776 billion shares, or 87 percent (87.435 percent). At the top of the list were AA Commercial Inc. and AV Value Holdings Corp. with 583.378 million shares, or 29 percent (28.724 percent), and 500 million shares, or 25 percent (24.619 percent), respectively. PCD Nominee Corp. held for Filipinos 364.235 million shares, or 18 percent (17.934 percent).

[Note: The percentages within brackets resulted from the Duediligencer’s computations based on 2.031 billion issued shares and without the decimal figures rounded off.]
Solid Group, the listed holding company of businesswoman Elena Lim and her family, spent P115.614 million in buying back 209.433 million shares, or P0.552 each. The stock’s last traded price of P1.27 put the company ahead by P0.718 per share, or a total of P150.366 million.

Public ownership

As of June 30, Solid Group reported in a public ownership report 2.031 billion issued common shares of which 1,822 billion shares were outstanding and 209.433 million were treated as treasury shares.

The company’s POR listed the nine members of the board led by Elena Lim as holders, either directly or indirectly, of 334.944 million shares, or 18.39 percent. Other insiders, who are officers combined, held direct ownership of 7.259 million shares, or 0.39 percent.

Solid Group listed only two principal stockholders. AA Commercial Inc. and AV Value Holdings Corp. directly owned 583.378 million shares, or 32.03 percent, and 500 million shares, or 27.45 percent, respectively.

With 1.426 billion shares classified as non-public, Solid Group credited the public with 395.961 million shares, or 21.74 percent. With such percentage, they could have elected their own director.

Solid Group based the POR computations on 1.822 billion outstanding common shares. In the general information sheet, it used in its computations 2,031 billion issued shares that included 209.433 million treasury shares.

Filinvest reacts

Nelson Bona, a senior vice president and chief financial officer of Filinvest Land Inc., wrote to explain the computation of public ownership of Filinvest common shares. The contents of his letter (see below) are self-explanatory.

“We write in connection to the article you wrote last July 20, 2016 in your Duediligencer column of The Manila Times entitled “Gotianun’s 24.8 percent additional voting power.”

“In the article, you mentioned several issues most important of which was the matter of the rule requiring listed companies to maintain a minimum public ownership of at least 10% of the company’s issued and outstanding shares, exclusive of treasury shares.
“We would like to make the following clarification:

As we reported as of December 31, 2015, 38.79 percent of the common shares or 9.406 billion shares are owned by the public. Foreigners own around 6.774 billion common shares through the PCD Nominee Corp. or 28 percent of common shares with Invesco as the single largest foreign stockholder owning 1.811 billion common shares or approximately 7.5 percent of total outstanding common shares. The foreign ownership component should not be deducted from the public ownership calculation since this is still considered public ownership. FLI has a total of 24.250 billion outstanding common shares.

Hence, even with your recomputation of public ownership that includes 8 billion of preferred shares owned by Filinvest Development Corp. (FDC), the percentage of public ownership in FLI is still over 25 percent, substantially above the 10 percent minimum public ownership requirement of PSE.

FDC owns close to 60 percent of the common shares and even without the preferred shares FDC already has a majority of voting rights.

Filinvest explained, through Mr. Bona, the implications of the numbers contained in the company’s POR.

He and I, however, differ in the interpretation of numbers. As I have been explaining in past Duediligencer writings, I write for the public investors who trade on shares listed on the Philippine Stock Exchange. I want to inform them about the number of listed common shares available for trading although not all these are traded.

As a matter of fact, the number of publicly traded common shares does not reflect at all the number of common shares attributed to the public in public ownership reports.

Perhaps, Mr. Bona could attribute to me my mistake in not elaborating my subtraction of Filipino-owned Filinvest common shares from Invesco-held Filinvest common shares. The difference represents the number of publicly owned Filinvest common shares held by Filipinos.

I have also been suggesting to the public, who as a group are significant stockholders of listed companies, to become active stockholders. By this I mean, they can organize themselves and elect their own nominees to the board. Their representation would ensure the protection of their investments against company insiders. Don’t trust the independent directors who are members of the board as long as they agree with the majority owners.

esdperez@gmail.com

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