TRANSPACIFIC Broadband Group Inc. (TBGI) lists HRH Prince Abdul Aziz Bin Talal Al Saud both as significant stockholder and member of the seven-man board. Because he is a member of the royal family of Saudi Arabia, he is addressed His Royal Highness.
As a record stockholder, the prince holds 100,000 TBGI shares, which, would not qualify him to the company’s board of directors. A regular director must own at least 44,403,866 TBGI common shares, equivalent to 20 percent of outstanding.
The company did not disclose the required number of common shares for a nominee to get elected to the board. The minimum 20 percent ownership resulted from a computation that excluded two independent directors. This would mean His Royal Highness at the time of his election was—and still is—a significant stockholder.
In a PSE posting, TBGI described Prince Talal Bin Abdul as “34 years old, has been with a director since June 2009.” He is the “fifth son of the founding King of Saudi Arabia, Abdul Aziz Bin Saud, and Princess Majdah Al Sudairi, daughter of H.E. Turki bin Khaled Al Sudairi, the president of the Government Human Rights Commission, and cousin of the Sudairi Seven.
“He is honorary president of the Website Services and Internet Technology (WSITGC) of the Gulf Cooperation Council (GCC) and chairman of the Arab Open University.”
Transpacific Broadband, according to a general information sheet (GIS) filed with the Securities and Exchange Commission, has authorized capital stock of 380 million common shares with par value of P1. Out of the total authorized capital stock, 222,019,330 common shares are issued and subscribed of which 382 Filipinos and seven foreigners hold 140,302,121 shares, or 67.12 percent, and 81,717,209 shares, or 39.10 percent, respectively.
In the same GIS, TBGI listed 19 20 stockholders plus “others” who hold 72,930,902 common shares, or 34.89 percent. The SEC filing credited certain stockbrokers who hold TBGI common shares for foreigners as of October 2015. Among them were Strategic Equities Corp. with 31,796,209 TBGI common shares, or 15.21 percent; and Premium Securities Inc., 10.386 million TBGI common shares, or 4.97 percent.
The other stockbrokers and their TBGI holdings for beneficial owners were Abacus Securities, 6,911,500 common shares, or 3.31 percent; SB Equities, 7.246 million common shares, or 3.47 percent; Jaka Securities, 10.276 million common shares, or 4.92 percent; Strategic Equities, 19,112,013 common shares, or 9.14 percent; Premium Securities, 1.823 million common shares, or 0.87 percent; and UOB Kay Hian Securities, 10.27 million common shares, or 4.91 percent.
His Royal Highness was not included in GIS stockholders’ list.
Will the Saudi Arabian price succeed in making Transpacific Broadband more profitable? As of March 31, TBGI reported retained earnings of P41,158,354, an amount of surplus that would not enable the company to declare dividend either in cash or in stock.
The last time TBGI declared stock dividend was in 2002 but without using its accumulated profits or retained earnings. Instead, it converted P58,341,330 to additional paid-in capital or APIC into 58,341,330 common shares and distributed them as stock dividend. For this purpose, TBGI increased in 2002 its authorized capital stock to 380 million common shares from 150 million common shares.
As a result of the stock dividend, the company’s subscribed and paid-up capital increased to P139,341,330.
Apparently, TBGI again piled up APIC of P29,428,022 as of March 31 because of the infusion of His Royal Highness. Its first quarter financial filing showed its earnings per share at P0.0005, a turnaround from loss per share of P0.0022 in the previous financial year.
Over par value
Transpacific Broadband is lucky to have converted its APIC into shares. The rule has changed years later when then SEC Chairperson Fe Barin questioned the conversion process.
Having been paid by stockholders, APIC, according to Barin, belongs to the company and should not be used to pay stockholders in the form of stock dividend.
Barin was right. Since then, APIC remains in the book of a corporation and used only to wipe out a company’s deficit when undergoing rehabilitation.
As an entry under equity in a financial filing, APIC refers to the amount paid by stockholders in excess of par value. Why should then the amount be returned to them?
Ayala Corp., for instance, reported P36.872-billion APIC as of March 31. The SEC’s rules on dividend do not allow it to return the amount to its stockholders because it is not under rehabilitation.
Ayala Corp, in fact, is one of the market’s favorite stocks. Instead of deficit, it had retained earnings of P31.56 billion “available for dividends.”