The Philippine Stock Exchange plans to obtain P1.55 billion in loan from three banks primarily to finance the acquisition of an additional stake in Philippine Dealing System and Holdings Corp., the owner and operator of the local bond exchange.
The PSE in a disclosure to the stock exchange said its board approved the availment of P1.15 billion in term loan facility from three banks—BDO Unibank Inc., Metropolitan Bank & Trust Co. and Bank of Commerce. The loan will have a term one-year.
The PSE plans to use P1.15 billion of the total loan to purchase more shares in PDS Holdings and P400 million for the exchange’s new headquarters in Bonifacio Global City and other capital requirements.
The PSE’s plan to acquire a majority stake in PDS Holdings is part of a strategy to merge the equities and the bond exchanges. The deal is worth P2 billion.
So far, PSE signed share purchase agreements with three shareholders of PDS Holdings, namely Bankers Association, the Philippines Investment Houses Association of the Philippines and Whistler Technologies. The deals will boost PSE’s ownership in PDS Holdings to 53.36 percent.
Other major shareholders of PDS Holdings include Singapore Stock Exchange, Tata Consultancy Services Asia-Pacific Philippines Inc., San Miguel Corp., Financial Executives Institute of the Philippines Research and Development Foundation, Development Bank of the Philippines, Social Security System and Citibank N.A.
PSE president Ramon Monzon earlier said he expects to close the PDS Holdings’ acquisition and obtain regulators’ approval on the deal within this year.
The PSE must secure an exemption relief from the Securities and Exchange Commission. The relief will allow the PSE to acquire a majority interest in PDS Holdings as the current rules prohibit any single industry from owning over 20 percent in any exchange.
The PSE must also obtain the approval of the Philippine Competition Commission, which is tasked to review all mergers valued at over P1 billion to ensure fair competition in the market.