A PUBLIC ownership report (POR) as of March 31, 2018 listed the seven members of the board of Philippine H2O Ventures Corp. (H2O) as direct owners of 9.204 million common shares equivalent to 3.784 percent of 243.242 million outstanding common shares.
These stockholders as of cut-off date were as follows: Jolly L. Ting, 414,720 common shares or 0.17 percent; Nanette T. Ongcarranceja, 1.866 million common shares or 0.77 percent; Melody T. Lancaster, 1.5 million common shares or 0.62 percent; Ortud T. Yao, 1.932 million common shares or 0.79 percent; Rodolfo L. See, 3.389 million common shares, or 1.43 percent; Ernesto S. Isla, 2 common shares; and Sergio R. Ortiz-Luis Jr., 1,500 common shares.
The same POR named Jolliville Holdings Corp. as holder of 89.339 million H2O common shares or 36.73 percent.
H2O affiliates combined for 60 million H2O common shares, which were equivalent to 24.68 percent of outstanding H2O common shares. These were Melan Properties Corp., NGTO Resources Corp., OTY Development Corp. and KGT Ventures Inc., which owned 15 million H2O common shares each.
Of the 243.242 million outstanding H2O common shares, the company’s public stockholders were credited with 84.699 million common shares or 34.82 percent. Like other listed companies, however, their holdings don’t translate to directorship.
Today, as H2O’s new majority stockholder, Udenna Corp. holds 150.825 million common shares, or 62.006 percent.
In a filing, H2O said the previous majority stockholders sold their holdings at P4.30 per H2O common share. The sale made the buyer (Udenna) the sole stockholder because H2O’s public stockholders, who, as of April 16, 2018 owned 84.699 million common shares or 34.82 percent, chose not to sell.
On June 11, 2018, H2O common shares closed trading at P5.89 per share. Ranged against Udenna’s offer of P4.30 per H2O common share, if the public stockholders sold the 84.699 million common shares that they owned, they would have lost P1.59 per H2O common share.
Udenna had offered to buy the remaining 92.417 million H2O common shares at P4.30 per share, a tender report by Maybank ATR Kim Eng said. Had these stockholders taken the offer, they would have lost a total of P146,942,416 from their sale of 92,416,614 H2O common shares.
The website of the Philippine Stock Exchange (PSE) reported H2O’s market performance. The stock hit a 30-day high of P6.35 and even recorded P10.80 as its high in 52 weeks.
Who among the public stockholders of Philippine H2O venture would sell at P4.30 when the price of the company’s common shares hit a high of P5.94 on June 11, 2018, which was also the opening price? Even if the stock’s price dropped to a 30-day low of P4.70, this price was still 40 centavos higher than Udenna’s offer of P4.30 per H2O common share.
Due Diligencer’s take
With its retained earnings of P177.621 million as of June 6, 2018, H2O could well afford to declare dividend either in stock or in cash. This could be the reason why the public stockholders who are not related to the sellers decided to stick it out with the company.
Besides, as public stockholders, they are the minority stockholders who could only wait for the stock’s price to go even higher. They would not mind at all even if the price stays at P5.94.
Is the public not taking the risk by holding on to their H2O common shares?
The answer lies in H2O’s financial filing, which showed the company’s earnings per share (EPS) up from P0.03 to P0.04. That’s a 33.333 percent increase!
Of course, there’s only one way to make H2O’s public stockholders sell to Udenna and that’s to offer them a price much higher than market. Otherwise, they would prefer to wait for the stock to rise until such time that Udenna, the buyer, finally engages in new ventures.
Will the hotel business be more profitable than trading? Just asking.