Trading of Liberty shares suspended following tender offer to minority

The Philippine Stock Exchange (PSE) suspended trading on Liberty Telecoms Holdings Inc. (LIB) shares starting Friday after its public float fell below the minimum public ownership requirement.

The public ownership of Liberty has gone down to 4.55 percent from 12.82 percent after controlling shareholder Vega Telecoms, now jointly owned by telecom duopoly PLDT Inc. and Globe Telecom, completed a tender offer to minority shareholders. The PSE requires a minimum public float of 10 percent for continued listing at the bourse.

Following Friday’s block sale for the acquisition of the shares tendered by minority shareholders, the PSE suspended trading on Liberty.

“While we encourage companies to continue to be listed, we respect the business judgment of listed companies to go private. Furthermore, we are in communication with the relevant regulatory agencies as regards the said transaction,” said PSE chief operating officer Roel Refran.

Liberty embarked on a tender offer from Aug. 24 to Oct. 20 this year following its petition for a voluntary delisting. The proposed date of delisting is on Nov. 21, which is still subject to the approval of the PSE.

After the delisting, minority shareholders of the company can still transact through the over-the-counter market but no longer through the facilities of the PSE.

Vega Telecom made a tender offer to minority shareholders of Liberty at P2.20 per share, a price that many of them deemed too low. By the end of the offer, however, many decided to accept the bait, saying it was better than being stuck at a privately held company.

Analysts believed the minority shareholders who did not tender their shares would go the legal route to get what they felt was a bigger chunk in the P70-billion telecom asset sale by conglomerate San Miguel Corp. to PLDT and Globe.

For shareholders of a delisted company, the biggest implication of their decision to stay put is higher taxes when shares change hands. The Bureau of Internal Revenue (BIR) imposes capital gains tax and a documentary stamp tax for every sale, barter, exchange or other disposition of shares of unlisted companies.

A capital gains tax equivalent to 5 percent of the net capital gains amounting to not over P100,000 will apply. Thereafter, a 10 percent capital gains tax will be imposed on the excess amount.

Also, a documentary stamp tax of P0.75 for every P200 of the par value of the stock will also be applied on the sale.

In contrast, trading of shares listed and traded at the PSE are subject only to a stock transaction tax equivalent to 0.50 percent of the transaction value.