The Philippine Stock Exchange said it scrapped plans to conduct preferred shares offering and will instead conduct another round of share buyback to reduce brokers’ ownership in the exchange to 20 percent before the end of the year.
PSE president and chief executive Ramon Monzon said in an interview that excluding the 3.4-percent stake held by First Metro Investments Corp., the local bourse would only to buy back less than 1 million worth of shares equivalent to 0.34 percent from existing brokers to achieve the 20-percent ownership limit.
The terms for the second round of buyback will be the same as in first round when the PSE was able to repurchase P445 million worth of common shares from existing brokers at P183.93 apiece.
Monzon said the PSE needed to find a way to address the 3.4 percent worth of shares acquired by FMIC when it “unwillingly absorbed” the PSE shares as an underwriter during the exchange’s stock rights offering.
“We are tying to find a way to address the FMIC bloc. Other than [that], we can already comply. We also cannot tell them to sell the shares at a loss,” Monzon said.
Monzon said forcing FMIC to sell their shares would mean roughly P200 million in losses for the investment bank as it absorbed the PSE shares at P252 per share.
“But we are looking for ways to address it. It is hard to attract buyers right now because the market is not doing well,” Monzon said.
Monzon said the PSE was initially planning to issue non-voting preferred shares to brokers in exchange for the common shares. He said that after consulting the Securities and Exchange Commission, it was agreed that the holders of the preferred shares would still have some voting powers on some corporate matters.
“So we are back-tracking on that. Instead of issuing preferred shares, we will just have a second round of buyback,” Monzon said.
Monzon said that once PSE was able to reduce brokers’ ownership in the exchange, the local bourse would move on and focus on implementing its projects and programs to boost the liquidity in the stock market.