Uys must not forget the public
Credit to Author: Emeterio SD. Perez| Date: Thu, 20 Feb 2020 17:13:35 +0000
Prior to the takeover by Dennis A. Uy and his wife, Cherylyn C. Uy, of ISM Communications Corp. (ISM), Monfortino Holdings Inc. directly owned 282,825,395 ISM common shares, or 26.33 percent of 1,074,324,234 outstanding ISM common shares, according to a public ownership report (POR) as of March 31, 2018 posted on April 16, 2018 on the website of the Philippine Stock Exchange (PSE). It attributed to the public their ownership of 673,775,759 ISM common shares, or 62.72 percent of outstanding.
The POR listed ISM’s nine-person board of its ownership of 400,548,475 common shares, or 37.28 percent. These were Eric O. Recto, chairman, with direct ownership of 21,645,215 common shares, and indirect ownership of 282,825,395 common shares, for total holdings of 304,470,610 common shares, or 28.34 percent; Craig E. Erlich, direct ownership 12,561,403 common shares, or 2.97 percent; Albert M. Montilla, direct ownership of 12,561,403 common shares and indirect ownership of 12,561,414 common shares, for a total of 25,122,817 common shares, or 2.34 percent; Ignacio R. Ortigas, direct ownership of 16,462,616 common shares and indirect ownership of 8,807,481 common shares for a total of 25,270,097 common shares; Rafael B. Ortigas, direct ownership of 13,800,001 common shares, or 1.28 percent; and Roberto V. San Jose, direct holder of 250 common shares.
The same POR listed ISM’s three independent directors. They held a total of 2,100 ISM common shares, namely, Luis Y. Benitez, 100 common shares; and Gregorio T. Yu and Jesus S. Jalandoni Jr., 1,000 common shares each.
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If you add the number of ISM common shares held by the board, Monfortino and the public, the sum would be 1,357,149,629 common shares, which tops 1,074,324,234 outstanding common shares by 282,825,395 common shares.
How did this happen?
The answer or answers could be that ISM’s public stockholders could have included the board’s direct and indirect ownership of 400,548,475 common shares and Monfortino Holdings’ 282,825,395 common shares. The two holdings total 683,373,870 common shares, which approximate the publicly-owned 673,775,759 common shares, or a difference of 9,598,111 common shares held by the general public.
Dividing 9,598,111 by 1,074,324,234 outstanding ISM common shares would result in the public ownership of 0.893 percent. Under the rule of the Securities and Exchange Commission (SEC), the public should own at least 10 percent of outstanding. In the case of ISM, they should have been owning 107,432,423.4 common shares.
This is the reason why Due Diligencer has been batting a long time ago for SEC officials to review the PORs of listed stocks. With Uys’ takeover, why disturb the family’s majority holdings?
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|Eric O. Recto is one of the directors of ISM. On Feb. 12, 2020, he reported his sale of 50 million ISM common shares at P1.98 per share. The sale reduced his indirect ownership to 182,825,395 common shares. He also directly owns 1,472,615 ISM common shares, or 0.05 percent of 2.8 billion outstanding ISM common shares of which 1,916,269,341 common shares, or 68.438 percent, are listed, according to the PSE website.
A POR as of Dec. 31, 2019 listed ISM having three principal stockholders but only Accion Common Development Fund SPC was listed as direct holder of 841,945,107 common shares, or 30.07 percent.
As chairman of ISM’s nine-person board, Dennis A. Uy directly owns 10,000 common shares and indirectly holds 618,611,461 common shares, for total ownership of 618,621,461 ISM common shares, or 22.09 percent. He is also ISM’s president and chief executive officer.
The other directors and their holdings are as follows: Cherylyn C. Uy, 266,129,198 ISM common shares, or 9.47 percent; Recto, 234,378,710 ISM common shares, or 8.37 percent; Ignacia S. Braga 4th, 1,000 ISM common shares; Gregorio T. Yu, 49.201 ISM common shares, or 1.76 percent; and Francis Chua, 1,000 ISM common shares.
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The board’s ownership totals 1,167,332,471 ISM common shares, or 41.69 percent of outstanding. The company’s public stockholders, according to the POR, owned 790,722,422 ISM common shares, or 28.24 percent.
The POR had two footnotes, which said “the shares indirectly owned by Dennis A. Uy and Cherylyn C. Uy are directly owned by Dennison Holdings Corp. These shares are not yet listed.” According to Footnote No. 2, “the shares indirectly owned by Eric O. Recto are directly owned by Monfortino Holdings Inc.” C in Cherylyn stands for Chiong. She is the wife of Dennis A. Uy.
On Feb. 12, 2020 when Recto bought ISM common shares, it opened trading at P2.31, hit a high of P2.37, dropped to a low of P1.94, and closed the session at P1.98. On Feb. 18, 2020, ISM common shares opened trading at P2.04, hit a high of P2.07, and dropped to a low of P1.80. The stock peaked at a 30-day high of P4.20 and fell to a 30-day low of P1.76.
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Here is a disclosure that tells about a share-swap between the capital stock of ISM and that of Udenna Corp.
“ISM Communications Corp. (ISM) wishes to inform the exchange that, at a meeting held on Oct. 18, 2018 by the board of directors, the board approved the following, subject to the ratification of ISM’s stockholders and regulatory approvals:
“Amendment of the Articles of Incorporation of ISM to increase ISM’s authorized capital stock from P2.8 billion consisting of 2.8 billion common shares with a par value of P1 per share to P75 billion consisting of 75 billion common shares with par value of P1 per share.
“To support the increase, the board also approved the issuance of 24,058,105,850 ISM shares to the shareholders of Udenna Corp., namely, Mr. Dennis A. Uy and Mrs. Cherylyn C. Uy in exchange for 2 billion Udenna shares representing Udenna shares, representing 100 percent of the outstanding capital of Udenna. These new ISM shares are being issued at P3 share.
“Amendment of the Articles of Incorporation of ISM to change the corporate name of ISM to Udenna Holdings Corp.
“The foregoing board approvals were ratified and confirmed by the stockholders,
representing at least 69.05 percent of the total outstanding capital stock of the company, present and represented by proxy, during the special meeting held this Jan. 31, 2019.”
A year after, the Uys again changed the name of ISM to Dito CME Holdings Corp.
By the way, what does the number of ISM common shares totaling 790,722,422 ISM cover? Do they include the nine-person board’s direct and indirect ownership of 1,167,332,471 common shares, which represent 41.69 percent of outstanding? Will SEC examiners tell us the inclusions? Just asking.
esdperez@gmail.com