Stock offerings in the offing
To my reckoning, at least three companies have formally applied for Initial Public Offering (IPO). These are GT Capital Holdings Inc., East West Banking Corp. and Calata Corp.
GT Capital Holdings is the flagship company of banking taipan George S. K. Ty. East West Bank is the banking arm of the equally investment-diversified Gotianum family. Calata is the agricultural products distributor formerly known as Planters Choice Agro Products Inc.
Two companies are taking the “Listing by way of Introduction” (LBI) route. These are the Lopez-held Rockwell Land Corp. and remittance services unit I-Pay Commerce Ventures Inc. of privately held IP Ventures Inc.
Ordinarily, a company may apply for listing by way of introduction when it is mandated by law or government agencies to list its shares on the bourse.
In this connection, the Philippine Stock Exchange (PSE) has reopened its window for LBI in March last year following its suspension in February 2010 for amendments by the Securities and Exchange Commission (SEC) to clear some disputable provisions.
New LBI rule highlights
On the subject of valuation, the applicant company is now required to determine the initial listing price of its securities on the listing date. Said price must be duly supported by a fairness opinion prepared by an independent and reputable firm duly registered or licensed by the SEC and accredited by the PSE; the criteria for accreditation of these firms (which include investment banks, financial advisory firms, and accounting firms) are provided in the new guidelines.
For the lock-up period, which is applicable to existing shareholders who own at least 10 percent of the applicant company’s issued and outstanding capital, the following guidelines will apply: 180 days for the First Board, 365 days for the Second Board and two years for the SME Board. The date of the lock-up begins on the listing date.
On the bourse’s prescribed trading band rule, this will be lifted on the listing date but will be reinstated the following day. This rule is made to allow the market forces to determine the price of the securities of the applicant company.
Also under the new rules, to ensure compliance with the mandatory public offering requirement of applicant companies, the PSE will impose any one or a combination of the following sanctions should the company fail to conduct the mandatory public offering within one year from listing: Suspend the trading of the company’s securities; sanction the company by, among others, doubling the annual listing maintenance fees payable by the company; or subject to the provisions of the Corporation Code and the rules and regulations of the SEC, require the company to buy back its securities within 90 days from the lapse of the one-year period and delist the company’s securities.
Finally, the new rules also specifically prohibit a backdoor listing prior to the conduct of the mandatory public offering to prevent any abuse of the rules by availing of its benefits without a bona fide intention to carry out the company’s business plans.
IPO for April
Taking center stage for the month is the initial public offering of GT Capital Holdings Inc. About 70 percent of the offering will be sold to international investors. The balance will be sold locally.
For the local portion, the offer period will start on April 10. It will end on April 12 for ordinary investors subscribing through the stockbrokerage houses or trading participants; it will be April 16 for those subscribing as “Local Small Investors” (LSI). Listing is scheduled on April 20.
As disclosed last April 3, the offer price is P455 a share. This is about 12.5 percent lower than the earlier set indicative price of P520.
The public offering will involve a total of 41,217,300 shares, consisting of 33,000,000 new or primary common shares and 8,217,300 existing common shares to be offered by current stockholders Ausan Resources Corp. and Titan Resources Corp. Another 6,182,595 common shares will be available as part of the “over-allotment options” provided in the underwriting agreement of the public offering.
Part of the international offer is 28,852,110 common shares. The sum of 8,243,460 common shares intended for PSE brokers or trading participants and 4,121,730 common shares for LSIs form part of the domestic offer.
The exercise may raise about $506 million. This will be the country’s biggest IPO since Cebu Air Inc.’s record share sale in October which raised about $600 million.
Bottom line spin
One purpose of the public offering is to further increase GT Capital’s 80-percent stake in property builder Federal Land Inc., as well as fund various real estate projects. As of Dec. 31, 2011, Federal Land, through its subsidiaries, has a land bank comprising 100.8 hectares.
Another is the plan of GT Capital to increase its direct ownership in Global Business Power Corp. (GBP), an affiliate of Global Business Holdings Inc. (GBH).
With this move, GT Capital is expected to have direct holdings in GBP up to 51 percent by the end of 2012.
GT Capital is expected to realize the first year of full contribution of this new arrangement by 2013, together with the output of Panay Energy Development Corp. (“PEDC”) and CEDC—GBP’s two largest power generation subsidiaries, which own power plants with a combined installed capacity of 410 MW.
Aside from real estate and power generation, GT Capital has investments in banking, through a 25.1 percent interest in listed Metropolitan Bank & Trust Co. (listed on the PSE since 1981 under the trading symbol “MBT”), in automobile manufacturing via a 21-percent stake in leading car maker Toyota Motor Philippines Corp., and 25.3 percent in Philippine AXA Life Insurance Corp.
MBT along with its subsidiaries and associates (the “MBT Group”), was the second largest Philippine bank by asset size, net loans and receivables, and total deposits, with total assets of P916.1 billion, net loans and receivables of P432.8 billion and total deposits of P656.4 billion as of Sept. 30, 2011.
On Dec. 31, 2011, it became the third largest Philippine bank by market capitalization (P143.5 billion, $3.3 billion).
(The writer is a licensed stockbroker of Eagle Equities, Inc.. You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com)
