Dito CME Holdings Corp.’s aborted P8 billion rights offer sent shockwaves across the local financial community, leaving ordinary stock market investors worried over the outcome ahead of the opening of trading on Monday.
Philippine Stock Exchange (PSE) president Ramon S. Monzon was among those demanding answers.
Dito CME Holdings Corp.’s aborted P8 billion rights offer sent shockwaves across the local financial community, leaving ordinary stock market investors worried over the outcome ahead of the opening of trading on Monday.
Philippine Stock Exchange (PSE) president Ramon S. Monzon was among those demanding answers.
In an interview with the Inquirer, Monzon expressed concerns on the decision of Davao-based tycoon Dennis A. Uy’s Dito CME, the holding company of telco challenger Dito Telecommunity, to cancel and defer the multibillion stock rights offering.
The unraveling of the offer, which was poorly received by the market despite running for nearly one month, was a first in recent PSE memory, Monzon said.
He said the cancellation hurts minority investors and would potentially cast doubts on future firm underwriting commitments that deal brokers make.
A standard feature in PSE fundraising documents, firm underwriting refers to the underwriter’s commitment to buy up shares that were unsubscribed. This was meant to protect investors because the underwriter would act as a final backstop and ensure the offer is successful.
Sy-led China Bank Capital Corp. was the sole underwriter of Dito CME’s stock rights offering, a type of fundraising that allows a company to raise money from current stockholders.
In Dito CME’s prospectus, Sy-owned China Bank Capital stated it will firmly underwrite the rights offer and “purchase the unsubscribed rights shares pursuant to its firm underwriting commitment.”
In the end, it appeared Dito CME exercised a provision in the prospectus stating it could withdraw the offer at any time. The only prerequisite action was to make the necessary disclosures to the PSE and Securities and Exchange Commission (SEC), the document showed.
A troubling sign for investors was the failure of Dito CME’s controlling shareholder, Uy’s flagship conglomerate Udenna Corp., to step in and save the deal.
The Inquirer learned of the cancellation and deferral of the stock rights deal on Friday evening. Last Jan. 13, Dito CME sought an extension to the offer deadline by a week to Jan. 25, saying it needed more time because of the recent COVID-19 surge.
The cancellation was made public on Jan. 29 after the PSE published Dito CME’s notice stating it would postpone the offer due “less than ideal” market conditions. Dito CME said it would also refund subscription payments.
Based on Dito CME’s prospectus, 80 percent of the proceeds from the rights offering will be used to bankroll the ongoing network rollout of Dito Telecommunity. It said the rest will be used for general corporate purposes. (©Philippine Daily Inquirer 2021)
Philippine Stock Exchange (PSE) president Ramon S. Monzon was among those demanding answers.
Dito CME Holdings Corp.’s aborted P8 billion rights offer sent shockwaves across the local financial community, leaving ordinary stock market investors worried over the outcome ahead of the opening of trading on Monday.
Philippine Stock Exchange (PSE) president Ramon S. Monzon was among those demanding answers.
In an interview with the Inquirer, Monzon expressed concerns on the decision of Davao-based tycoon Dennis A. Uy’s Dito CME, the holding company of telco challenger Dito Telecommunity, to cancel and defer the multibillion stock rights offering.
The unraveling of the offer, which was poorly received by the market despite running for nearly one month, was a first in recent PSE memory, Monzon said.
He said the cancellation hurts minority investors and would potentially cast doubts on future firm underwriting commitments that deal brokers make.
A standard feature in PSE fundraising documents, firm underwriting refers to the underwriter’s commitment to buy up shares that were unsubscribed. This was meant to protect investors because the underwriter would act as a final backstop and ensure the offer is successful.
Sy-led China Bank Capital Corp. was the sole underwriter of Dito CME’s stock rights offering, a type of fundraising that allows a company to raise money from current stockholders.
In Dito CME’s prospectus, Sy-owned China Bank Capital stated it will firmly underwrite the rights offer and “purchase the unsubscribed rights shares pursuant to its firm underwriting commitment.”
In the end, it appeared Dito CME exercised a provision in the prospectus stating it could withdraw the offer at any time. The only prerequisite action was to make the necessary disclosures to the PSE and Securities and Exchange Commission (SEC), the document showed.
A troubling sign for investors was the failure of Dito CME’s controlling shareholder, Uy’s flagship conglomerate Udenna Corp., to step in and save the deal.
The Inquirer learned of the cancellation and deferral of the stock rights deal on Friday evening. Last Jan. 13, Dito CME sought an extension to the offer deadline by a week to Jan. 25, saying it needed more time because of the recent COVID-19 surge.
The cancellation was made public on Jan. 29 after the PSE published Dito CME’s notice stating it would postpone the offer due “less than ideal” market conditions. Dito CME said it would also refund subscription payments.
Based on Dito CME’s prospectus, 80 percent of the proceeds from the rights offering will be used to bankroll the ongoing network rollout of Dito Telecommunity. It said the rest will be used for general corporate purposes. (©Philippine Daily Inquirer 2021)
