RETAINED earnings. SM Prime Holdings Inc. (SMPH), which belongs to the SM group controlled by businessman Henry Sy Sr. and his family, has issued 33.166 billion shares of which 27.818 billion shares are outstanding and 5.349 billion are treasury shares.
As of September 30, 2013, SMPH had P47.639 billion in retained earnings, which would entitle the owners of common shares to P2.74 a share. But that’s not how the system works. Instead, listed companies have the option to appropriate part of their retained earnings for projects, which, in the case of SMPH, amounted to P27 billion this year and last year, leaving it with P20.64 billion and P16.9 billion in unappropriated retained earnings in 2013 and 2012, respectively.
Buy-in. DFNN Inc. is borrowing P86 million from Leisure and Resorts World Corp. If it chooses to become a DFNN stockholder, per loan deal, LRWC has the option to convert the loan into shares at P4.75 a share.
The conversion—again, if LRWC would prefer it—would increase DFNN’s outstanding shares to 168.1 million shares and LWRC would own 18.1 million DFNN shares that would be equivalent to 10.77 percent, more than enough to elect one seat to DFNN’s 11-man board.
In the debt-share swap, which would not be the first for DFNN, the lender would become a DFNN significant stockholder while the borrower would not be burdened of paying 8.5-percent interest for the 36-month loan.
Buyback. On November 25, International Container Terminal Services Inc. (ICTSI) bought back 5,000 shares at P98.60 each. The reacquisition increased the number of the company’s treasury shares to 11.22 million. ICTSI, which had $337.03 million in retained earnings, opened and closed at P99, slightly putting it ahead . . . . As of November 25, Calata Corp. had 175,000 treasury shares after buying back 75,000 shares at the stock’s close of P3.56 a share. The company reported retained earnings of P151.09 million as of September 30, 2013 . . . . Philippine Racing Club Inc. bought back 500 shares at P8.80 each, the stock’s close, increasing the number of its treasury shares to 27.79 million. As of financial filing in the first nine months, PRCI has spent P353.02 million in buying back 27.57 million shares, or P12.80 a share.
Good bye investors. The government, under President Benigno Aquino 3rd, is not—and has never been—in the mood of attracting investments. As a matter of fact, it does not care whether foreigners stay or leave by making their operations difficult.
Remember Ford Philippines? The American car has packed and left for Thailand leaving Filipino observers speculating on the true reason it abandoned the Philippines. Like many others, Due Diligencer could only make a guess: too many regulations imposed by regulatory agencies such the Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR).
Imagine this: A group of foreigners arrive in this country for “look-and-see” survey of the country’s investment climate. Told that they have to hire lawyers to guide them around, they are shocked. What on earth do they need legal assistance for, when we come only to observe first? Then, they are told that BIR comes out from time to time with regulations intended to facilitate its collections. Instead of intensifying its collection efforts, it facilitates its job by passing on to the taxpayers the burden of paying.
The SEC, meanwhile, is seeking the public to comment on the proposed increase in various fees it collects from investors. Due Diligencer could not believe reading from a posting on sec.gov.ph that the fee increases are necessitated by “inflation.” Is public service—whether good or bad—affected by inflation? Yes, it is but only in the Philippines!
Then, the SEC cited as another reason the “cost of hiring and retaining qualified personnel.” What? Due Diligencer did a research a week ago and was told that the SEC does not directly hire personnel, but does the hiring thru an employment agency.
How about the BIR? Due Diligencer has been told of a new tax regulation requiring the appraisal by an independent appraiser the issuance even of a common voting share for nominees in a non-listed company. Where was Kim Henares when Ford left for Thailand? She has not learned yet and probably does not intend to learn from the exodus of foreign investments for some other destinations where the investment climate is more favorable.
HELP! Camotes group of islands, which was among those hardest hit by Super Typhoon Yolanda. A victim, who is now in Manila, said that Channel 2, which is owned by ABS-CBN Corp., has announced that its relief goods were coming. Unfortunately, for the islanders, the help from the Lopez-owned station did not arrive, or probably arrived but entrusted the relief goods to the government, which, as has been known, failed to deliver.
The victim from the island narrated this and asked Due Diligencer to thank Channel 7 and its people for their sacrifice in braving the flood mud to be able to reach Camotes islands.