OPMC not ready for cash dividend

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Emeterio Sd. Perez

Here is a suggestion to public stockholders who trade on listed shares, such as those of Oriental Petroleum and Minerals Corp. (OPMC): Don’t forget to read the explanatory notes in the definitive information statements (DIS).

You may find them informative because they elaborate on the affiliations of your company’s corporate stockholders.

Don’t investors want to know, for instance, that Consolidated Robina Capital Corp. “is a 100 percent subsidiary of JG Summit Holdings Inc. (JGSHI)?”

In the DIS, Oriental Petroleum and JG Summit have three common directors, namely, John Gokongwei, Jr., his brother James, and son Lance. Anyone of these three directors, according to the company, is authorized to vote OPMC shares that JG Summit owns.

In addition, Oriental Petroleum explained the ownership profile of R. Coyiuto Securities, in which the majority stockholder is “Mrs. Rosie Coyiuto, wife of Mr. Coyiuto.”

On the other hand, the Coyiuto brothers, namely Robert and James, own Prudential Guarantee, according to OPMC.

By the way, the acquisition of additional 400 million OPMC A shares at P0.013 each raised Go’s stake in it to 739 million, or 0.369 percent. OPMC shares closed at P0.012 on Monday, causing Go a paper loss of P400,000.

Dividend

If you are among the public stockholders of Oriental Petroleum, you are probably wondering why the company has not declared a dividend in at least the last two years.

Of course, you don’t expect Oriental Petroleum to distribute stock dividends when its 200 billion capital shares of stock are fully issued. The company has to increase its authorized capital to have more than enough shares for such dividends.

As for a cash dividend, Oriental Petroleum does not have enough retained earnings to finance it. As of June 30, the company’s unaudited consolidated financial report showed retained earnings of $2.213 million, which at P50 to a dollar equals P110.667 million, a surplus too small for a fully paid 200 billion capital stock to pay a cash dividend.

Because of the shortage of surplus, the public needs to wait until such time that OPMC’s surplus would be sufficient to share with its stockholders.

If Oriental Petroleum pays its executives in US dollars, perhaps it could also pay its stockholders cash dividends in the greenback.

Executive compensation

Oriental Petroleum, which uses the US dollar as a functional currency, pays well its top executives in US dollars.
As posted on the website of the Philippine Stock Exchange, the following are the pays and perks of OPMC executives:

Aside from Go and Coyiuto, the three other top individual earners are Aldrich T. Javellana, finance adviser; Ma. Riana Infante, chief finance officer; and Teresita H. Vasay, treasurer. As a group, they received $213,000 in 2015 and $234,000.80 in 2016. This year, the company estimated their pays and perks at $245,000, according to the company’s DIS.

The rest of OPMC executives who are grouped under “all other officers,” were paid $253,000 and $333,000 in 2015 and 2016, respectively. This year, they are set to receive $348,000.

In the same DIS, Oriental Petroleum said it paid the 10 members of the board $19,165 in 2016.

Due Diligencer’s take

There is nothing that prevents a listed company from distributing cash dividend to its loyal public stockholders as long as it has enough retained earnings.

The problem, though, is OPMC does not have the surplus and its public stockholders may have to wait a little longer before they could receive something in return for their loyalty.

Yes, if Oriental Petroleum pays its top executives in US dollars, the company’s public stockholders would, perhaps, not mind if they were paid their cash dividends in pesos.

It is certain that the Gokongweis and the Coyiutos are working toward satisfying the need for dividends of the OPMC’s public stockholders. After all, like the majority stockholders, they should reap the rewards of loyalty to the company.

But in the meantime, OPMC’s public stockholders can’t do anything but wait.

esdperez@gmail.com

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