Landbank seeks SEC waiver on bond exchange ownership

MANILA, Philippines — Land Bank of the Philippines is seeking exemptive relief from the Securities and Exchange Commission (SEC) after informing the commission of its plan to acquire the Philippine Dealing System Holdings Corp. (PDSHC), operator of the country’s fixed income exchange.

In a briefing yesterday, SEC chairperson Teresita Herbosa said Landbank has already conveyed to the SEC its acquisition plan and has indicated that it would file for exemptive relief from the corporate regulator.

“They already wrote to us. They will need exemptive relief,” Herbosa said.

Under the Securities Regulation Code, no single industry or business group should own more than 20 percent of an exchange. Thus, both the Philippine Stock Exchange Inc. and Landbank need to ask for an exemptive relief from the SEC regarding the rule.

But Herbosa said, Landbank and PSE would have to submit their respective offers first to the PDS Group before the SEC can decide on their applications.

“They have to bid first. They have to first determine who will win the bid,” Herbosa said during the Pandesal Forum yesterday organized by STAR columnist Wilson Lee Flores of Kamuning Bakery.

The exemptive relief will then pave the way for the finalization of the acquisition of additional shares in PDS Holdings Corp.,”

The PSE, the operator of the local bourse, has been moving to acquire the PDS Group.

It has already signed share purchase agreements with the shareholders of PDSHC, but the shareholders may still entertain other offers, such as that of Landbank, especially if the counter-offer is more attractive.

The PSE needs to reduce its ownership of the stock exchange to 20 percent from 27.9 percent to be able to proceed with its plan to merge the stock exchange and the fixed-income exchange. Under the SRC, no single industry or business group should own more than 20 percent of an exchange.

Just last January, Landbank announced plans to acquire at least 66.67 percent of PDSHC.

“The maturation of the domestic fixed income market, improved financial sophistication of local investors, the ASEAN financial integration, and a high growth economy underpinned on infrastructure development make PDS an attractive business model,” Landbank president and CEO Alex Buenaventura said in a letter to the bank’s board of directors seeking approval for the acquisition.

The PSE, for its part, wants to merge the two exchanges to be at part with global practices, and to deepen the country’s capital markets.

“The company is determined to complete all the phases of its compliance plan, particularly the stock rights offering, being one of its major components. Thus, the company is hopeful that it will obtain the exemptive relief from the SEC soon, which will then pave the way for the finalization of the acquisition of additional shares in PDS Holdings Corp.,” the PSE has said.

But Finance Secretary Carlos Dominguez, chairman of Landbank, had expressed frustration over the PSE’s delay in complying with the SRC, saying that it is tantamount to “thwarting the government’s goal of attaining a robust and inclusive financial system through the development of the country’s capital markets.”