P303-M IPO. The majority stockholders of Harbor Star Shipping Services Inc. are taking their company public. They are selling 181.60 million new shares to outsiders at P1.88 each, an initial public offering (IPO) that will gross the company P341.41 million. Less the standard expenses incurred in an IPO, Harbor Star will net P303.23 million from the stock offering.
Harbor Star’s IPO net proceeds of P303.23 million may be very small compared with giant offerings in the past. Nevertheless, the money can significantly expand the operation of Harbor Star by buying tugboats and other infrastructure.
Incidentally, not all the IPO proceeds will be spent in financing Harbor Star’s expansion because P45 million, or 14.84 percent, of the IPO net proceeds will be used to pay borrowings.
STOCKHOLDERS. Prior to the IPO, Harbor Star listed in a filing the following stockholders: Geronimo P. Bella, P249.01 million, or 58.78 percent; Ricardo P. Bella, 166.04 million shares, or 39.19 percent; Ignatius A. Rodriguez 8.47 million shares, or 2 percent; and Damian L. Carlos and Ryota Nagata, with 59,763 shares each, or 0.014 percent. Eventually, it issued 1,000 shares each to Jose S. Navarro and Manuel H. Puey, independent directors.
Post-IPO, the Bellas and their fellow stockholders will remain the majority owners of Harbor Star even if their ownership will be diluted by the IPO. But the percentage of their holdings will be diluted to 41.14 percent; Bella (Ricardo) to 27.43 percent; Rodriguez to 1.40 percent; Carlos and Nagata, 0.01 percent each.
PRE-IPO DIVIDENDS. As the majority stockholders, the Bella group did what should be done with Harbor Shipping’s retained earnings.
From July 2011, Harbor Star distributed total dividends of P276.46 million of which P261.64 million was in stock. The dividends were distributed as follows: On July 4, 2011, the Bellas and company got 118 million shares, or 72.84 percent stock dividend, in proportion to their individual holdings; 143.64 million shares, or 51.30 percent stock dividend on May 10, 2012; and P0.035, or P14.83 million, in cash dividend on February 6, 2013.
Harbor Star declared all these dividends in accordance with the policy its board approved on October 18, 2012 to distribute 10 percent of prior net income as dividend.
Then when they decided to raise funds from the public, last month, they raise the dividend to 20 percent of prior year’s net income. Still, the percentage is much less than what the majority owners got before the IPO.
INCOME. Harbor Star has been making money that enabled its stockholders to declare dividend. It reported income before tax of P210.47 million and net income of P147.81 million in 2012; income before tax of P187.82 million and net income of P131.76 million in 2011; and income before tax of P41.80 million and net income of P26.17 million in 2010.
The amounts pertaining to income before tax are included here to approximate the fees due the members of the board of Harbor Star. As a policy, “each director shall receive a reasonable per diem allowance for his attendance at each meeting of the board.”
The company paid the members of its board P200,000 in 2010 and 2011; and P220,000 in 2012. It estimates the group’s per diem at P940,000 this year.
EXECUTIVE COMPENSATION. Geronimo Bella, chairman and president, and Ricardo Bella, director and vice president, are the highest paid executives of Harbor Shipping since 2010.
As a group, they along with three others received P19.35 million – salary in P17.69 million, bonuses P1.38 million, and others, P276,470 – in 2010; P24.18 million, salary of P22.11 million, bonuses P1.73 million, and others, P345,463 – in 2011; P26.54 million – salary of P24.26 million, bonuses P1.90 million, others P379,100 – in 2012; and estimated at P27.07 million – salary of P24.75 million, bonuses P1.93 million, others, P387,000 – in 2013.
Harbor Star said the other officers and directors as a group unnamed received P35.73 million in 2010; P46.52 million in 2011; and P53.24 million in 2012. By the end of the year, the company estimated their pays and perks at P55.99 million.