PSE member-brokers said the SEC "merely stated an opinion" on the issue and wrote to the PSE without specifically stating that the exchange was bring compelled to abide by the SEC directive.
The letter in question was penned by SEC Commissioner Fe Eloisa Gloria writing on behalf of the commission en banc.
In the letter, the commission said it was "issuing the following directive" and listed three points on the three issues raised by Itogon-Suyoc Mines.
According to a broker who claimed anonymity, however, the SEC letter could be construed as a "mere opinion" that the PSE could either accept or reject.
This means that despite the SEC’s position, the PSE could still require to undertake a rights or public offering for the shares offered to Philweb by ISM.
The PSE’s ruling on the matter was that the rights offer or public offering for the shares was requires when "there is likely to be a significant demand for shares from existing shareholders."
In the cases where there was an expected significant demand from existing shareholders, the PSE rules do not allow private placement, debt-to-equity conversion, share-for-share or property-for-property swaps if the price for the new shares would be at a discount higher than 10 percent of the market price or at book value, whichever was higher.
The SEC, on the other hand, upheld the private placement agreement and said that the transaction was exempted from the PSE rule since no existing shareholder was interested in the placement. – Des Ferriols