Listed firms that are planning to sell shares will now be require brokers to disclose price range, consisting of a floor price and a cap, before filing with the local bourse.
The Philippine Stock Exchange said in a directive posted on its website on March 22 the new rule covered follow-on and stock rights offerings, and exchange traded funds.
Under the recently-implemented listing rules, an applicant company is required to disclose in the prospectus an offering price range consisting of a floor price and a cap. Listing applications without disclosure of the price range will not be accepted by the PSE
The PSE’s current listing rules, however, no longer require the disclosure of a price range for any type of public offering of equity shares. But by practice, listed companies intending to conduct such public offerings normally indicate the maximum number of shares to be offered and the maximum price in its prospectus and other offering documents.
“Small investors, in general, fail to recognize that the price disclosed in the offering documents is the ceiling and that the final offer price may be lower than the disclosed price. The investors may expect to realize capital gains considering the difference between the market price and the disclosed maximum offer price,” the PSE said.
With the new rule, the PSE said investors would be informed of the possible changes in the final offer price.
The last company that conducted a follow-on offering was San Miguel Food and Beverage Inc., which set a maximum offer price of P140 per share. But the final offer price was later pegged at P85 apiece.
Companies that have expressed plans to conduct follow-on offerings this year include Gotianun-led Filinvest Development Corp., Dennis Uy-owned ISM Communications and gaming firm Tiger Resort Leisure and Entertainment Inc. via Asiabest Group International Inc.
PH Resorts Group Holdings Inc., another company owned by Uy earlier deferred plans to conduct a follow-on offering, saying it was “presented with more strategically suitable alternative options for its funding needs.”
No companies so far have expressed plans to conduct rights offering and exchange traded funds this year.