CALATA Corp. on Tuesday said it cannot voluntary delist itself from the stock exchange, as it does not have funds to do so.
Calata said in a statement that “legal and practical consideration makes it impossible to make the tender offer” when it voluntary delists from the Philippine Stock Exchange (PSE). The PSE Inc. has been putting pressure on Calata for violating trading rules several times.
“Based on its 2016 audited financial statements, Calata only has around P400-million retained earnings,” Calata said. “Should a tender offer be made, the company needs to have around P1 billion to buy back its public shareholders.”
The company in August said it was selling out to Millennium Global Holdings Inc. (MGHI). A listed firm, MGHI will buy 81 percent of Calata shares via subscription to 2.5 billion unissued shares.
The company carrying the surname of its founder said it will then transfer all its current assets and liabilities to another firm before it will fold-in the assets and liabilities of MGHI to its unit Millennium Ocean Star Corp. (MOSC). MOSC has its own seafood business.
“If the company is forced to do a tender offer, it will not only be contrary to law but, also, it will have an effect of liquidating the whole company just to satisfy the PSE’s will for the company to do the tender offer. This is because of the large public float, which is almost 70 percent of the company,” Calata said. “To liquidate the company just because the PSE wants a tender offer is not only impractical but grossly unfair.”
Calata said after MOSC’s management takes over the company, Calata will have “a new and promising business and a new hope that their [shareholders] investment will be recovered.”
In July the PSE decided to start involuntary delisting procedures against Calata barely a month after it suspended the agricultural firm’s shares from trading.
The PSE said it found Calata to have violated disclosure rules 29 times during November 29, 2016, through June 20 this year. The PSE said it also found 26 violations by Calata of Section 13.2 of the PSE Disclosure Rules from October 6, 2016, to March 16 and April 26 to May 2.
“Under the scale of penalties in the PSE Disclosure Rules, the fourth and succeeding violations [of the rules] constitute grounds for delisting,” the PSE said.
When it suspended the trading, the PSE said Calata violated rules on the timely disclosure of the disposition of shares by a company’s directors and principal officers and disclosure of updates of previous disclosures on material information that may affect investor decision.
The PSE also found the company to have violated the “blackout rule”. The rule prohibits directors and principal officers who have obtained material nonpublic information to trade their company’s shares within a prescribed period.
The blackout rule is in place to provide a fair market environment to the investing public by disallowing the possible trading of company insiders using nonpublic information that they may have access to by virtue of their position in the company.