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THE
stock market may slowly lose trading volume without the
regulators noticing it. Already, there are a number of
what are called listed companies that are rarely
traded—or not at all. For example, shares in San Miguel
Pure Foods Co. Inc. (PF) had not been traded at all
since May 30, 2008. Only 400 PF shares changed ownership
in 2006 and 100 shares in 2007 and 100 shares this year.
There is a reason for this: Purefoods is a wholly-owned
subsidiary of San Miguel Corp. but is still a public
company.
But
other listed companies may also end up rarely traded
because of certain corporate practices such as executive
acquisitions, buyback and tender offer. Executive
acquisitions or insiders’ trades may not hurt the market
at all because the shares remain lodged with the PCD
Nominee Corp. But the effect or effects of buyback and
tender offer is something that should worry the
regulators.
****
Willy Ng
Ocier has been buying shares in Pacific Online Systems
Corp. (Loto). His last acquisition of 50,000 shares at
P8.50 each on July 11, 2008 increased the number of
shares he owned to 16.814 million shares, or 8.419
percent.
It is
true that Ocier is an insider. As a matter of fact, he
is more than an insider; he is chairman and president of
Pacific Online. But the twin post does not make him an
illegal insider trader as he is just like the ordinary
investor, who trades through the facilities of the
Philippine Stock Exchange (PSE). His filings indicate
transparency in his trades.
Incidentally, Ocier is vice chairman of Belle Corp.
which he directly owns 24.447 million shares, or 0.386
percent. Belle directly owns 24.609 million shares, or
12.322 percent, of Pacific Online.
Disclosures clearly show his regular transactions. The
oldest available filing, which is still posted on the
PSE web site on August 6, 2008, showed Ocier bought
31,100 Loto shares at P11.75 five days or on August 1.
The acquisition raised his holdings to 1.231 million
shares, or 0.644 percent. Loto is the market symbol of
Pacific Online. It tells everything about its business
venture.
****
Ocier
has something in common with Felipe Lapuz Gozon. Both of
them buy shares in their company in the open market.
Like Ocier, Gozon is chairman and president of GMA
Network Inc.and is also the chief executive officer of
the broadcast group. Available file lists Gozon as
direct owner of 6.177 million shares, or 6.30 percent.
Ocier
and Gozon, however, have something not common between
them. The latter’s acquisition of GMA 7 shares coincided
with the company’s buyback program. As of March 31,
2008, GMA Network had bought back 3.645 million shares
at a cost of P28.38 million. On the other hand, Ocier
has long been trading on Pacific Online shares. It was
only last week that the company in which Ocier owns
shares reported its plan to join the buyback bandwagon,
with plans to reacquire “up to 2 million” of its own
shares. The budget for this buyback will come from the
company’s retained earnings which amounted to P52.812
million as of March 31, 2008.
There
are so many other executives who are engaged in buying
and selling shares in their own companies. There is
nothing wrong with their trading activities just as
there is nothing illegal in a company buying back its
own shares. At least an insider is still part of the
public. What may be wrong is if a listed company is left
with no shares owned by the public, a situation that
will make it listed but not necessarily public.
****
Certain
listed stocks may end up with no shares available for
trading, particularly if the buyback practice remains
unregulated. Not that it should be totally scrapped;
perhaps, either the Securities and Exchange Commission
or the Philippine Stock Exchange should put a limit on a
listed company’s reacquisition of its own shares so as
not to make very obvious one’s reason for going
public—that is, for tax reduction purposes only.
Buying
back shares is not the only practice that is bound to
hurt the market. Even the rule on what is redundantly
called tender offer is bound “to wipe out” publicly-held
shares in listed companies. A good example is the
ongoing offer made by SEA Refinery Holdings B.V., a
Netherland-registered company. It has offered to buy the
remaining 60 percent of outstanding shares in Petron
Corp. including 3.75 billion held by the
government-owned Philippine National Oil Co. in
accordance with the rules implemented by the Securities
and Exchange Commission. If the present rules do not
make an exception, then Petron, if the offer is
successful, will end up private again with all its
shares owned by a single stockholder. SEA Refinery has
already bought 3.75 billion Petron shares, or 40
percent, owned by Aramco Overseas Ltd. |
