IS it time to place Alliance Select Foods International Inc. under receivership to protect the interests of the company’s public stockholders? Never mind the majority and significant stockholders who, being represented in the company’s seven-person board, can well fend for themselves.
In a receivership, a management committee is formed to study whether a distressed company should be rehabilitated or liquidated. In case of rehabilitation, a new team is formed to bring a losing company back to profitability. Shareholders of Alliance Select must be hoping the company would not fall into the second option, which is liquidation.
The public urgently needs to know what happened, not tomorrow or the day after tomorrow but now. In other words, Alliance Select’s insiders should by now understand the urgency of explaining the stock’s price decline.
While the public may be eagerly waiting for a response from the management of Alliance Select, allow Due Diligencer to explain some numbers based on disclosures.
Here is a Due Diligencer’s caution: This piece won’t recommend either rehabilitation or liquidation for Alliance Select. It is up to the public to make a conclusion based on the numbers cited here, which were culled from the various disclosures filed by the company.
Alliance Select shares, which have been on a decline, fell to close at P0.60 on Jan. 26 from a 52-week high of P1.33. This was a market performance that should have alerted PSE’s market watchers and their counterparts at the Securities and Exchange Commission into action.
Question: How bad is that for the shareholder? Answer: If any of the significant stockholders of Alliance Select bought the stock at P1.33—that would mean a paper loss of P0.73 per share, that is, if the shares have not yet been sold. What a costly investment!
As of Sept. 30, 2015, Alliance Select reported an accumulated deficit of $17.371 million. At an exchange rate of P47.60 to a dollar, these accumulated losses translate to P826.867 million, only P173.133 million off the P1-billion mark. These numbers make the future look bleak for the company’s much awaited, though not necessarily expected, financial recovery.
In the first nine months of 2015 alone, the company reported a cumulative net loss of $3.084 million, which is equivalent to P146.798 million at P47.60 to a dollar. This resulted from a drop in revenue of 13.277 percent to $56.661 million from $64.184 million in the same period in 2014.
What misfortune had hit Alliance Select? In the first three quarters of 2014, the company registered a net loss of only $733,903 on revenue of $64.184 million, but which more than quadrupled to $3.084 million in the same period the following year.
Who are responsible for Alliance Select’s continuing decline? If you are among the firm’s public investors, would you blame the current intramurals between the company’s Filipino stockholders and their foreign partners? Definitely not. Something more serious could be hurting the company.
Presenting the board
For the information of the public, here are some of the managers of Alliance Select who make up the board, to whom they could address their queries:
Jonathan Y. Dee, 54 years old, has been chairman since Dec. 8, 2014. He holds “a Bachelor of Science Degree in Operations Management from La Salle University in Philadelphia, USA.
The seven-person board of Alliance Select takes pride in having on their side an American. George E. Sycip, is the son of Washington Sycip, also an American, one of the founders of accounting firm SGV and Co. George is the company’s vice chairman. Ironically, he carries the title “independent director.” No one knows for sure how independent he is. Alliance Select said: “Mr. Sycip received his BA ‘With Distinction’ in International Relations/Economics from Stanford University and his Master in Business Administration degree from the Harvard Business School.”
Raymond K.H. See, 47 years old, is president and chief executive officer. He obtained his degree in B.S. Industrial Management, with minor in Mechanical Engineering from De La Salle University in 1989.
Marie Grace T. Vera Cruz, 34 years old, member of the board, “holds a Master’s Degree in Business Administration from the London Business School and a Bachelor’s Degree in Business Economics, magna cum laude, from the University of the Philippines.
Erwin M. Elechicon, 56 years old, member of the board, is a cum laude Bachelor of Arts degree in Economics graduate of Ateneo de Manila University. He also studied Finance at Columbia Business School and Marketing at Kellog School of Management.
Antonio C. Pacis, 74 years old, took up law at the Ateneo Law School and his master’s degree from the Harvard Law School in 1965.
Hedy S. Chua, 56 years old, a Singaporean, is the seventh member of the board. She finished her Bachelor of Arts Degree from Pomona College in California USA. She remains persistent in asking the management to allow her group to inspect the company’s books, apparently for her, and others like her, to know the reasons behind the unpleasant financials of Alliance Select. She has yet to succeed in her endeavor, which she began years ago for the sake of the public. She should enlighten the public on her next move through an interview with Due Diligencer possibly in Singapore.