MANILA, Philippines—Lopez-led ABS-CBN Corp. is embarking on a capital restructuring program that is seen as giving it leeway to boost stock liquidity in the future.
In a disclosure to the Philippine Stock Exchange on Monday, ABS-CBN announced that its board had approved the reclassification of 200 million issued common shares into one billion voting preferred shares. A 200-million bloc of common shares is equivalent to about 26 percent of the broadcasting giant’s outstanding shares.
The common shares to be reclassified have a par value of P1 per share while the voting preferred shares that will replace them will have a par value of 20 centavos.
ABS-CBN will convene a special stockholders meeting on Nov. 15 to present the proposed charter amendment to allow these changes.
“We already have unissued common shares so it made sense to convert these so that we will not be subject to the 25 percent subscription requirement for the prefs (preferred shares),” said Melissa Ortiz, ABS-CBN head of investor relations.
Ortiz said ABS-CBN currently has no foreign ownership of common shares. “What they can own is our PDRs (Philippine depositary receipts),” she said.
Through these PDRs or papers that represent shares of stocks in a company, foreigners own about 29 percent of ABS-CBN.
The proposed voting preferred shares to be created to replace 200 million shares – will be cumulative, non-participating, redeemable and non-convertible to common.
What this capital restructuring means, according to Campos Lanuza & Co. head of research Jose Mari Lacson, is that ABS-CBN would have the flexibility in the future “to sell more shares, possibly below 50 percent, without losing control.”
“It will increase liquidity with the new share sale,” Lacson said.
Based on PSE data, ABS-CBN has about 41.35 percent of its common shares held by the public. Based on its closing price of P32.55 per share on Monday (down by 0.31 percent), it had a market capitalization of about P25 billion. ABS PDRs fell by 1.97 percent on Monday to close at P32.40 per share for a market capitalization of P8.99 billion.