PSE delists Calata

The Philippine Stock Exchange (PSE) is punishing Calata Corp. with its strongest penalty—delisting, or the removal from the roster of publicly traded companies—on grounds that the agriculture company had repeatedly violated disclosure rules.

The PSE said in a regulatory filing Monday that it had initiated the “involuntary delisting” procedure for Calata, adding the company would be allowed to appeal and explain its side.

Calata has been under a trading suspension since June 30, 2017 after it was discovered that the company did not immediately disclose trades made by its chair, CEO, president and owner, Joseph Calata.

A news report had cited a company official, who blamed the late disclosure to a mere office error: A staffer of Mr. Calata misunderstood his instructions to inform the PSE and instead filed the trades for the company’s internal record.

At the time, the PSE said it would impose a one-month trading suspension after it said Calata violated “multiple disclosure requirements” and the so-called blackout rule.

This rule bans directors and principal officers who have learned of certain material information from trading their shares within a prescribed period.

Upgraded suspension

The PSE, under its disclosure rules, said violations after the third offense “constitute grounds for delisting.”

On Monday, this suspension was upgraded to the start of the delisting process.

Specifically, the PSE said Calata had 29 violations of Section 13.1 of its disclosure rules from Nov. 29, 2016 through June 20, 2017.

Moreover, it counted 26 more violations of section 13.2 of the same rules from Oct. 6, 2016 until March 16, 2017 and also from April 26, 2017 through May 2, 2017.

Opportunity to explain

Delisting in this manner carries severe repercussions. According to the PSE, a company cannot re-list within the next five years while directors and executive officers would be disqualified from becoming directors or executive officers of any company applying for listing within the same period.

A Calata spokesperson did not immediately respond to a request for comment. The PSE said Calata “shall be given the opportunity to explain its side by submitting a Memorandum or Position Paper and by participating in a hearing specifically scheduled for this purpose.”

Other companies that have been delisted or are being delisted for nondisclosure include Alphaland Corp. and Uniwide Holdings Inc.

The PSE’s announcement follows a rocky relationship between Calata and regulators since the company went public in 2012. Shortly after its public debut, it was embroiled in a stock manipulation scandal that triggered an investigation from the Securities and Exchange Commission.

Livestock supply-chain business

Calata, which lured investors for its integrated approach to the livestock supply-chain business, ended 2016 with a profit of P120.5 million and sales of P2.2 billion.

Last year, it sought to diversify into property and gaming via a $1.4 billion venture in Cebu with Sino-America Gaming Investment Group, LLC and Macau Resources Group Limited.

Those talks collapsed early this year.

Calata had a pre-suspension market value of P1.2 billion.