Biz Buzz: Good cop, bad cop

ALL of a sudden, the Securities and Exchange Commission seems to be making the right noises when it comes to the long-delayed merger between the Philippine Stock Exchange (PSE) and Philippine Dealing and Exchange Corp. (PDEx).

To recall, the PSE and the Bankers Association of the Philippines (BAP)—the organization that owns a majority stake in PDEx, the operator of the country’s only bond exchange—agreed as early as last year on a P2-billion-plus merger between the two bourses, with the stock exchange as the surviving entity.

For this to be consummated, the surviving entity (in this case, the PSE) would have to secure what is called an “exemptive relief” from the corporate regulator, which exempts the bourse from a prohibition in the Securities Regulation Code that caps its ownership in other bourses to 20 percent. That’s because the merger would result in PSE owning about 95 percent of PDEx after all is said and done.

The merger was, in fact, pushed by no less than the country’s top financial market regulators, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. and Finance Secretary Cesar Purisima, who gave their imprimatur to the move. A merger, after all, was supposed to “deepen” the Philippine capital market and put it at par with its more advanced counterparts in the region.

But soon after the agreement was sealed between the PSE and BAP a few months ago, the SEC changed its tone on the issue.

Biz Buzz learned that in one particularly important meeting between the PSE and the corporate regulators, an SEC commissioner “voiced his concerns” about the merger. All of a sudden, this commissioner started making all sorts of excuses (the teka teka variety which businessmen have come to expect from the government in the last five years, we were told).

The signal was clear: The SEC would dribble the ball and kill time on this merger, which all parties involved worked so hard on.

What happened next during the meeting surprised everybody. Biz Buzz sources said no less than PSE chair Jose “Titoy” Pardo—a soft spoken and amiable man who practically never gets upset with anything—just simply blew his top at the SEC people.

“He made his displeasure very clear, and we were all so surprised,” said one observer, who has long known Pardo to be one of the coolest and calmest people around even when the Estrada administration (under which he served as finance chief) was facing an imminent fiscal crisis. “I’ve never seen Titoy so angry.”

In any case, Pardo’s “righteous anger” seems to have worked, given the change in tone of the SEC brass.

But the source said one could never tell for sure. It seems the SEC commissioner involved was opposing the merger on the orders of a higher up who is (on the surface) supporting it. This makes for an interesting “good cop, bad cop” routine.

Why? Well, let’s just say some people in the government never liked some people at the PSE. “It’s personal,” our source said. Daxim L. Lucas

Off to China

THERE may be economic turmoil behind the Great Wall but this could also be seen as a good time for the brave investor with long-term horizon to pick up some assets.

Gokongwei-led Robinsons Land Corp. is debuting in the Middle Kingdom with the purchase of the right to use an 8.5-hectare property in Chengdu, the capital of Sichuan Province and known as the natural habitat of the giant pandas.

Asked why RLC had chosen Chengdu as its entry point to China, RLC president Frederick Go said: “Chengdu has a big market and economy is good.” He said RLC had long studied Chengdu and it was no longer a strange territory. As property prices softened in China, Go said it was a good time to buy.

The property, bought an RLC an offshore unit, is intended for the “development of residential projects with a minor commercial component,” RLC’s disclosure to the Philippine Stock Exchange showed. Doris Dumlao-Abadilla

TECH offering at P20/sh

CIRTEK Holdings Philippines Corp. has priced its follow-on offering at P20 per share, down from the earlier price ceiling of P24 per share. Two industry sources privy to the offering said this was based on a forward-looking price-to-earnings (P/E) ratio of 12 times for 2016, which means investors will pay 12 times of what they expect to make from this company next year. Investors are thus seen to be buying into future earnings. Note that the overall market is now trading at a P/E ratio of over 20 times.

Roberto Juanchito Dispo, president of First Metro Investment Corp. (one of the underwriters together with SB Capital Corp.) said this pricing was meant to “provide investors significant upside and promote healthy after-market demand.”

Dispo said the offering was “well-received by the institutional investors, with the offer multiple times covered, post-completion of the institutional book-building exercise.” He said demand would likely strengthen even further as the public offering starts today, Oct. 28.

As the offering will consist of up to 80 million primary common shares with an oversubscription option of up to 40 million secondary common shares, this sets the re-IPO (initial public offering) size at P2.4 billion. Doris Dumlao-Abadilla

‘Pseudo-consumer group’

THE CAMP of Reghis Romero II thinks someone is out to harass the businessman.

The latest iteration of what the camp believes is a publicity campaign against him is a complaint filed in the Office of the Ombudsman against him and his firm, Harbour Centre Port Terminal Inc.

The violation? HCPTI allegedly stored over 500,000 sacks of rice owned by the National Food Authority in its warehouse at its North Harbor facility without the explicit permission of the NFA.

The complaint was filed last week by Jayson Luna, director of a little known outfit called the National Coalition of Filipino Consumers. In his complaint, he alleged that storing NFA rice in Harbour Centre’s facility was a violation of the law since the port operator was not an NFA-accredited warehouse.

This left the officials of Harbour Centre scratching their heads as they insist that no NFA rice was stored at their port facility. The only NFA rice they handled, company officials said, were offloaded from a vessel that delivered them to port and immediately put on NFA-accredited delivery trucks to be taken out of the facility.

The officials are also wondering why the reports of their supposed violation cropped up in tabloids first, leaving them with the suspicion that this was part of an organized publicity campaign against the company and Romero.

The company has since pointed to a statement issued by an NFA regional director saying that no NFA rice was found in the premises when a surprise inspection was made. Instead, what they found in the facility were iron ingots and bars.

Harbour Centre said its lawyers were now taking steps to study and file appropriate legal actions against these “unscrupulous individuals who are hiding behind a pseudo-consumer group.” Daxim L. Lucas

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