Dennis Uy’s Dito CME defers P8 billion stock rights offer

Davao-based tycoon Dennis A. Uy’s Dito CME Holdings Corp. has decided to scuttle its P8 billion rights offering after the fundraising effort fell through due to weak demand from large investors.

The collapse of the deal is a blow to Dito CME, which owns a controlling stake in telco challenger Dito Telecommunity, and also raises questions on the credibility of firm commitments that underwriters make to ensure that offers do not fail.

China Bank Capital Corp. was the sole underwriter for the deal.

“The retail investors came through but institutions chose to stay on sidelines due to the bearish market environment,” Dito CME president Ernesto R. Alberto told the Inquirer in a text message.

Alberto said the company, which owns a controlling stake in telco challenger DitoTelecommunity, may relaunch the offer in the “July-August timeframe” after the company completes its third network audit.

In a stock exchange filing on Saturday, Dito CME said its management has “determined that current market conditions are less than ideal to pursue the offering” and thus decided to “defer the stock rights offer.”

Moreover, the telco holding company said it shall refund any and all subscription payments made by any existing shareholder or qualified institutional buyer during the offer period of the stock rights offer.”

The rights offer, a type of share sale for existing stockholders, ran for nearly a month.

Warning signs emerged when Dito CME, last Jan. 13, sought an to extension to the offer deadline by a week to Jan. 25. It was originally scheduled to conclude last Jan. 18.

Bulk of the offer proceeds were meant to finance the ongoing rollout of Dito Telecommunity, a venture between Uy and state-run China Telecom.

Dito CME earlier said it would sell 1.64 billion shares at a discount of P4.88 per share. Dito CME shares dropped 1.17 percent to P5.08 per share on Friday.

During a virtual business forum last Jan. 12, Dito CME chief finance officer Joseph John L. Ong said DITO Telecommunity was close to sealing a long-term loan deal with a consortium of Chinese and other foreign banks.

Ong, who declined to name the banks, said the loan commitments were in excess of $4 billion but added the company was not expected to borrow the entire amount.