News and entertainment giant ABS-CBN Corp. said on Friday it had raised P500 million from investors, bolstering ongoing efforts to pivot to digital media amid a challenging environment.
In a Philippine Stock Exchange (PSE) filing, ABS-CBN said it had sold all of its treasury stock, or 21.32 million shares, and 11.5 million Philippine Depositary Receipts (PDRs) at a premium to institutional buyers, which typically refer to large funds, investment banks and private equity firms.
The shares and PDRs were sold at P15.23 each, the filing showed.
“It looks like the interest in ABS-CBN is there and for them to sell at a premium shows to investors they can eventually produce profits even without a franchise,” Astro del Castillo, managing director of First Grade Finance Inc., said in an interview on Friday.
A company spokesperson said the fresh funds would be used for their “digital initiatives, content production and other general corporate purposes.”
Earlier on Friday, ABS-CBN disclosed that its board approved the fundraising effort that was set to raise as much as P748.57 million had the company disposed of all of its PDRs, of which there were 16.3 million left.
ABS-CBN earlier noted that major shareholder Lopez Inc. was willing to underwrite up to P500 million of the equity sale “in the event that none of the shares are taken up by institutional buyers.” It was unclear if Lopez Inc. participated in the offer on Friday.
ABS-CBN sold a sizeable stake during tough market conditions.
On top of poor market sentiments at the PSE due to the recent surge in COVID-19 cases, the company continues to incur financial losses after its broadcast franchise expired in 2020.
At P15.23 per share, the offer was also priced 9.9 percent higher than the market value before the deal was disclosed and a 19-percent premium over the 30-day volume weighted average price.
“ABS-CBN has consolidated its resources and it continues to enjoy viewers online and also subscriptions,” Del Castillo said.
“They also hold their [content] assets. Moving forward, they can compete with the big players,” he added.
ABS-CBN said losses in the third quarter of 2021 narrowed by over 90 percent to P303.1 million from the same period in 2020 due to higher revenues and significant cost-cutting measures.
Treasury shares are those bought back by the company and currently not counted as part of its outstanding shares.
Meanwhile, ABS-CBN’s PDRs are Securities and Exchange Commission-registered equity instruments that grant holders, including restricted foreign investors, economic but no voting or ownership interests in the company.
PDRs can be converted to regular common shares with voting rights as long as this would not violate the Constitution, which requires media companies to be 100-percent owned and controlled by Filipinos.
ABS-CBN’s PDRs, used by other companies including rival GMA Network Inc., became a political tool in the Duterte administration’s campaign versus the media giant and its owner, the influential Lopez family.