DITO CME trading halted after share sale postponed
MANILA – The Philippine Stock Exchange halted trading in DITO CME Holdings Corp shares on Monday after the company announced over the weekend that it was canceling its stock rights offering.
Shares of other companies held by Dennis Uy, DITO CME’s largest shareholder, meanwhile fell in Monday’s trading, in contrast to the rise in other listed companies.
The PES said it had ordered DITO CME to submit a full and complete disclosure about its scuttled share sale “within the day”.
“Given the materiality of the foregoing information and pending the submission of the Company’s Full Disclosure, the Exchange will implement a trading suspension in DITO shares beginning at 9:00 a.m. today, the January 31, 2022,” the PES said.
In a statement dated January 29, DITO CME said it had notified both the Securities and Exchange Commission and the PSE of its decision to cancel the stock rights offering.
“Due to less than ideal market conditions, we have decided to postpone the SRO. Instead of this capital raising exercise, we are considering several alternative financing proposals that have recently become available to us and which we consider to be more valuable for our shareholders,” said Ernesto Alberto, President of DITO CME.
The company, which owns a majority stake in third-party telecom company DITO Telecommunity, earlier announced that it plans to raise 8 billion pesos through the sale of shares to fund the expansion of the telecom company.
DITO CME even requested an extension of the rights offering from January 25 to January 18, citing “logistical difficulties” caused by the recent increase in COVID-19 cases.
But despite lasting nearly a month, the fundraising effort met with weak investor demand.
The PSE meanwhile said it was unhappy with the postponement of the rights offering.
“This should not be construed as an endorsement by the Stock Exchange of the postponement of the offering,” the PES said in a statement over the weekend.
“Further, this is without prejudice to any regulatory action the Exchange may take in order to ensure full compliance with applicable rules and for the protection of the investing public in accordance with the mandate of the Exchange, as a self-regulatory body, maintain a fair and orderly market,” the PES added.
Retail investors are poised to lose due to delayed activity, Conrado Bate, chairman of COL Financial and director of the Shareholders’ Association of the Philippines.
“I’m not talking about the turnout ditto. (There’s a huge turnout here) People have made so much money. They could lose a lot of money. They’re still here and hoping the regulators can do their job. We don’t know what they will do,” Bate said.
DITO CME Chief Financial Officer Joseph John Ong said the company was able to secure commitments of more than $4 billion in long-term debt from foreign lenders.
“These commitments are more than enough to fund the deployment of DITO Telecommunity’s plans for the last 3 years of our five-year capital investment plans,” he said.
April Lee Tan, head of research at COL Financial, said it was understandable that Udenna, the parent company of DITO CME, did not come to buy the shares not purchased under the offer.
“I guess Udenna also has problems with capital budgeting, so maybe they don’t have that budget,” Tan said in an interview with the ANC.
She noted that DITO Telecommunity will need huge capital expenditure over the next few years and it will take several years before the telephone company becomes profitable.
“It will be difficult if 100% of this is funded by Udenna, because of course Udenna has other businesses,” Tan said.
Meanwhile, shares of other Udenna Group companies fell in Monday’s trading. Uy’s PH Resorts Group Holdings Inc, which is building a hotel-casino in Cebu, was down 7.5%, Phoenix Petroleum was down 1.6%, while Chelsea Logistics and Infrastructure Holdings Corp was down 0.61%.
The PSEi rose 1.51%, while the broader All Shares index was up 1.25% at the close of trading.
Asia Nikkei reported earlier that while Uy’s Udenna Corp’s assets have grown from 31 billion pesos in 2015 to 310 billion pesos in 2020, debt has grown even faster, from 22 billion pesos to 255 billion pesos. pesos during this period.
– with a report by Warren De Guzman, ABS-CBN News