ABS-CBN to buy back P4-B shares, PDRs

Media giant ABS-CBN Broadcasting Corp. will buy back from the market about P4-billion worth of its common shares and Philippine Depository Receipts (PDRs) to consolidate its holdings and to provide benefits to its employees.

"The company plans to acquire up to 10 million shares or PDRs, which will be used for the employees’ stock option plan," ABS vice president and chief financial officer Randolph Estrellano told the Philippine Stock Exchange.

ABS-CBN has about 780 million outstanding shares with 268 million in the form of PDRs, a convertible form of securities which can be owned by foreigners.

"Given the recent share price decline, ABS-CBN believes that its share prices are undervalued and not reflective of the company’s strong fundamentals and dominant position in its industry," he added.

At yesterday’s close of trading, ABS-CBN common shares stood at P39 each, gaining P1 from Friday while the ABS-CBN PDRs also ended P1 higher at P39.50. Last year, ABS-CBN common stocks reached a high of P67 in April before succumbing to the general downtrend, falling to a low of P35 in October.

Essentially, a company buys back its own shares to build up market liquidity and to signal that its own stocks represent the best investment available to it. This is likewise a way by which the company can effectively distribute cash, or in ABS-CBN’s case stocks, to its shareholders.

ABS-CBN’s move comes after similar buy-back programs undertaken by other listed companies such as San Miguel Corp., Jollibee Foods Corp. and Aboitiz Equity Ventures Inc.

In 2000, the Lopez-owned broadcast firm continued to chalk up gains as its net income improve 13 percent to P2.26 billion on a solidly-growing revenue base of P9.32 billion. – Conrado Diaz