No more preemptive right for RFM stockholders

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Emeterio Sd. Perez

Emeterio Sd. Perez

INSIDERS’ trades. On August 28, Eduardo I. Plana, a member of the board of Security Bank Corp. (SBC), bought 3,500 shares at P111.05 each. From a high of P154 on July 12, SCB dropped 31.8 percent to P105 on Wednesday on net foreign selling of P154.7 million, equivalent to 52.4 percent of the day’s value turnover of P294.9 million.

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On August 27, Magdalena Albarracin Jr., a member of the board of Trans-Asia Oil and Energy Development Corp., bought 50,000 shares at P2.14 each. The acquisition increased his holdings to 8.8 million shares. Trans-Asia hit a 30-day high of P2.81 on July 24 and fell 27 percent to a low of P2.05 on August 28, when net foreign selling totaled P2.4 million, or 10.7 percent of the day’s value turnover of P22.5 million.

On August 16, Junice Aguilar, an assistant vice president of Union Bank of the Philippines (UBP), sold 500 shares at P129.50 each and another 500 shares at P130 each. UBP climbed to a high of P140 on July 12 and fell 21.4 percent to a low of P110 on August 28.

No more preemptive right. The Concepcion-Araneta family, who controls RFM Corp., has taken away the right of stockholders to future share issuances. The company said that its board approved on Wednesday a resolution amending its Articles of Incorporation to reflect said denial of preemptive right.

In an ownership filing, RFM claims that it is more public than others, because the public own 1.5 billion shares, or 48.5 percent of 3.2 billion outstanding shares.

Ironically, the composition of the company’s 11-man board does not reflect said ownership profile, because the directors all represent the Concepcion-Araneta group that also nominates the independent directors.

Poor public. Without preemptive rights, the real public stockholders, who are neither Concepcions nor Aranetas, would also be limited to their present holdings. This would be an anomalous situation in that the board, which is controlled by the Concepcion-Araneta group, could approve the issuance of shares to companies that they either own or control.

With the public owning close to 50 percent of outstanding, RFM still has a wide room for dilution and still maintain compliance with the market’s 10-percent minimum public ownership rule.

The “outsiders” certainly would not know who owns how much of RFM’s outstanding shares, because PCD Nominee Corp. holds 410.5 million shares as record stockholder for unnamed foreigners, and 335.1 million shares for unnamed Filipinos.

Deprived of dividends. Denial of preemptive right is also tantamount to depriving stockholders outside of the majority the opportunity to increase their share of a company’s retained earnings in the form of dividends, either in cash or in stock.

In the first six months of 2013, RFM reported net profit of P387 million, up 28.1 percent from P302 million in the same period this year.

As a result of consistent profitability, RFM has piled up retained earnings of P1.3 billion, which, if declared as dividends, would go to the holders of 3.2 billion outstanding shares.

Annual meeting. Central Azucarera de Tarlac (CAT), the sugar central owned by the Cojuangco family, will finally hold its annual stockholders’ meeting on October 29, according to a filing posted on the website of the Philippine Stock Exchange. Under its corporate charter, CAT should have held its annual stockholders’ meeting in January each year but has been postponing it.

CAT has also failed to submit on time its financial filings to the Securities and Exchange Commission. It attributed the delay to “financial issues” such “negotiations on the settlement of certain liabilities with a major customer.”

In an ownership filing, CAT listed two significant stockholders—Jose Cojuangco and Sons Inc. with 7.8 million shares, or 27.8 percent, and Luisita Trust Fund with 4.7 million shares, or 16.7 percent.

esdperez@yahoo.com

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