THE Philippine Stock Exchange Inc. (PSE) on Wednesday said it spent some P445.1 million in its share buyback program still being held by the brokers.
The amount is 83 percent of its P532.01-million budget, aimed at bringing down the brokers’ ownership to 20 percent.
The Exchange’s report said those who sold back their shares to the PSE represent 2.41 million common shares, which will revert to the PSE as its treasury shares. The PSE bought the shares at P183.93 apiece. PSE’s shares were last traded at P176.50.
The PSE’s shares were suspended from trading for one hour as a result of the said report. There’s still no word if it was able to bring down the brokers’ ownership to the limit.
Under the plan, the PSE will use cash to buy back the shares but will book these as treasury shares.
It will then create 3.5 million preferred shares, which are nonvoting and nonconvertible. The PSE can also redeem the said shares beginning on its third year.
“The nonvoting preferred shares shall only be issued to brokers. The terms and conditions of issuance and nonvoting preferred shares to brokers, including the dividend rate thereof shall be fixed by the board of directors,” the PSE said earlier.
The PSE, however, needs the approval of its shareholders before it can proceed with the creation of the preferred shares. It will also need to amend its articles of incorporation to reflect such change.
As of early this year, the brokers still own 26.44 percent of the exchange, or still above the mandatory 20-percent cap of ownership of a particular sector.
The PSE said earlier it is in “earnest efforts to comply with the 20-percent industry limit provided by the Securities Regulation Code.”
In March last year, the PSE was able to bring down the brokers’ ownership to about 21.71 percent, shortly after listed its 11.5 million shares in stock rights offer to existing shareholders, a measure intended to pull down brokers’ ownership to the minimum requirement. It, however, was not able to count many of the shares still being held by brokers’ principal shareholders and related parties lodged in omnibus client accounts.
The PSE raised P2.98 billion from the measure, proceeds of which was supposed to be used for the acquisition of PDS, or short for Philippine Dealing System, among others. To date, the PSE still has not bought the PDS, which owns the Philippine Dealing and Exchange Corp., the operator of the fixed- income trading platform.
“The Exchange configured its trading system to automatically prevent the posting of a buy order for PSE shares from accounts that will push it over the 20-percent threshold, or if it is still below 20 percent but the matching of the buy order will cause broker industry ownership to breach the 20 percent level,” Ramon Monzon, PSE president, said earlier.
Image credits: Nonie Reyes