Is ISM more public than others?


Emeterio Sd. Perez

“WHEN a listed company either bought back its own shares in the open market or made a tender to buy out the minority stockholders, the public might wonder why this was happening. What would the company do with the resulting treasury shares?”

The use of a pair of quotation marks in the above paragraph is to inform the readers of The Manila Times of a rehash of the first paragraph of Due Diligencer that was posted on Feb. 5, 2015 on our website. As a matter of fact, the entire piece was devoted to the offer of ISM Communications Corp. to buy out the public of the common shares that they owned.

To be able to appreciate this piece, the public may want to read said Due Diligencer. Instead of reprinting the entire column, I am writing a brief profile of the company in response to a reader who questioned the money raised by ISM from what he said was a stock rights offering. He asked: Where are the investments that the company promised to make?

More public?

ISM Communications is another listed company that pretends to be more public than others when it is not. In a public ownership report (POR) as of Dec. 31, 2015, it reported the public as holders of 442.359 million common shares equivalent to 61.763 percent of 716.216 million outstanding common shares. This ownership should make the public the company’s majority stockholder.

In the same filing, ISM reported 1.2 billion treasury shares, having spent P1.824 billion in buying them back, according to a quarterly financial posting as of June 30, 2015. This translates to P1.52 per share. .

As of the same cutoff period, the same POR credited the foreigners as public stockholders, with 142.632 million shares or 19.915 percent.

By subtracting foreigner-held ISM common shares from publicly held 442.359 million ISM common shares, Filipinos owned 299.727 million, or 41.849 percent.

Principal stockholders

In the same POR filing, ISM named three principal stockholders. These were Monfortino Holdings Inc., 71.783 million common shares or 10.02 percent; Asset Holder PCC No. 2 Ltd./Asian Recovery Fund, 56.535 million common shares or 7.89 percent; and EMDCD Ltd., 29.546 million common shares or 4.13 percent.

An affiliate was listed as holder of 27.058 million common shares, or 3.78 percent.

In summing up their holdings – “their” refers to directors, management, principal stockholders and affiliates – ISM said the holdings of said insiders totaled 273.857 million common shares, or 38.24 percent, of which 244.473 million shares were directly owned.

Of the insiders’ total holdings, ISM’s 11 directors combined for 160.728 million common shares, or 22.44 percent.
Eric O. Recto, chairman and CEO, was the biggest individual stockholder, with 83.693 million common shares or 11.29 percent. Second was Craig E. Ehrlich, vice chairman, who directly owned 21.383 million common shares or 2.99 percent.

Treasury shares

In selling 358.108 million treasury shares, ISM lost 34.21 percent of the acquisition cost.

Treasury shares are shares that had been bought back by listed companies. In the case of ISM, the company made a tender to reacquire 1.2 billion common shares from Nov. 28, 2014 to Jan. 23, 2015.

In a footnote to an audited financial filing, ISM said it bought back each share at P1.52 in a buyback offer that attracted the holders of 1.412 billion common shares.

“However, since the tendered shares were more than the offer shares, the company only accepted the tendered shares on a pro rata basis, disregarding the fraction,” ISM disclosed in Footnote No. 14 of the audited financial filing for 2015. “Thus, the company accepted a total of 1,199,999,193 of the tendered shares at a price of P1.52 or for a total consideration of P1,823,999,989.”

ISM returned the excess 212,212,417 of the tendered shares to the selling stockholders “together with the payment of the consideration for the accepted shares.” Due Diligencer will explain in next piece the effect of the sale of treasury shares on ISM’s capital stock.


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