Treasury shares

Credit to Author: EMETERIO SD. PEREZ| Date: Thu, 17 Jan 2019 16:19:30 +0000

Emeterio Sd. Perez

Prime Orion Philippines Inc. (POPI) listed Ayala Land Inc. (ALI) and Orion Land Inc. (OLI) as principal stockholders in a public ownership report dated Jan. 15, 2019. In said disclosure, ALI and OLI owned 2.703 billion POPI common shares, or 54.91 percent of 4.923 billion outstanding POPI common shares, and 538.977 million POPI common shares, or 10.95 percent, respectively.
Together, the major stockholders combined for ownership of 3.242 billion POPI common shares, or 65.86 percent.

By deducting 67.545 million POPI common shares, or 1.37 percent, held by nine members of the board, and 2.235 million POPI common shares which Prime Orion issued as subscriptions under Employees Stock Ownership (ESOWN) and what it referred to as “employees’ shares, the public stockholders of Prime Orion ended up owning 1.611 billion POPI common shares, or 32.72 percent.

While ALI directly owns 2.73 billion POPI common shares, Orion indirectly holds 26.496 million POPI common shares, or 0.538 percent.
In a footnote, POPI explained that “the ESOWN subscriptions exclude subscriptions of directors listed above, and fully paid subscriptions of former employees.”

On Jan. 15, 2019, POPI opened trading at P2.57, peaked at P2.65, dropped to a session’s low of P2.57 and closed trading at P2.60. Volume, which pertains to the number of common shares traded, was low at 742,000 POPI common shares.

Ownership profile

As of Dec. 31, 2018, Roxas Holdings Inc. (RHI) reported having issued 1.566 billion common shares. Minus 17.643 million common shares held in treasury, the company had outstanding 1.548 billion common shares.

The nine members of RHI board owned 1.526 million RHI common shares as of Dec. 31, 2018,

Of 1.458 billion outstanding RHI common shares, Roxas Holdings said in its public ownership report (POR) that three principal stockholders held a total of 1.292 billion RHI common shares, which were equivalent to 83.45 percent of 1.548 billion outstanding RHI common shares. When recomputed, 1,291,864,105 RHI common share divided by 1,547,935,799 RHI common shares equals 0.83457, or 83.457 percent.

The following were, as of Dec. 31, 2018, RHI’s principal stockholders: Roxas & Co. Inc., 318.342 million RHI common shares, or 20.56 percent; First Agri Holdings Inc., a subsidiary of First Pacific Co. Ltd., 467.855 million RHI common shares, or 30.22 percent; and First Pacific Natural Resources Holdings B.V., 505.666 million RHI common shares, or 32.67 percent.

As of Dec. 31, 2018, RHI credited the public stockholders with ownership of 254.546 million RHI common shares, or 16.45 percent. As recomputed, the public stockholders ended up holding 254,546,187 RHI common shares, which were then equivalent to 0.16444, which, in percentage form, equals 16.444 percent.

On Jan. 15, 2019, RHI common shares totaling 53,000 were traded at P2.87 throughout the day’s session.

Due Diligencer’s take

The number of outstanding common shares may not all be listed on the Philippine Stock Exchange (PSE). If the public investors would go by the number, they would find, for instance, POPI has 4.923 billion outstanding common shares of which 2.39 billion common share, or 48.548 percent of outstanding, are listed.

On the other hand, Roxas Holdings reported 1.548 billion RHI common shares as outstanding on PSE website but has 1.566 billion RHI common shares listed, or the entire 1,565,579,279 issued RHI common shares, which, incidentally, included 17,643,480 treasury common shares.

Apparently, both POPI and RHI plan either to reissue their treasury shares or resell them to the public at a much better price. In an unaudited quarterly financial filing, Roxas Holdings said it spent P52.290 million in buying back more than 17.643 million common shares, which it now holds in treasury.

By dividing P52.290 million by the number of RHI treasury shares, the result showed an average buying price of P2.964 per RHI common share. Ranged against this, RHI common shares were traded at P2.87 throughout the session on Jan. 15, 2019. This means RHI would be losing P0.0937 per RHI common share.

In a footnote to its quarterly filing, Prime Orion said: “On June 27, 2017, Orion Land Inc., a wholly owned subsidiary of POPI, acquired 512,480,671 shares of POPI with a cost of P1.26 billion. This is presented as shares held by the subsidiary in the consolidated statement of financial position as at September 30, 2018 and December 31, 2017.” This translates to an average acquisition price of P2.4586 per POPI treasury common share.

By the way, how does a buyback plan of listed stocks affect the 10-percent minimum public ownership rule? Just asking.

esdperez@gmail.com

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