Prime Media Holdings secure shareholders' approval for backdoor listing and more

Barkadans will remember that Prime Media Holdings [PRIM 1.52 1.33%] itself is a non-viable and non-operational enterprise and that the company had signed a memorandum of understanding with the Philippine Collective Media Corporation (“PCMC”) to have PRIM acquire PCMC using its own shares in a share-for-share swap.

To facilitate the deal, the PRIM board approved a move to raise PRIM’s authorized capital stock (ACS) to P7 billion (up from P700 million), and then sell 1,679,966,400 common shares to PCMC’s shareholders to give the PCMC shareholders a majority interest in PRIM. At the same time, the board also approved a move to sell up to 300 million shares at P1.00/share in a private placement(s). 

PRIM shareholders approved both board decisions, while also waiving their minority shareholders rights with respect to the FOO/SRO requirement under the PSE’s additional listing rule.

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 It’s interesting that the amount of the ACS raise is set at or near the maximum amount under the PSE rule that 25% of the ACS raise would need to be “paid-up.”

What does PRIM plan to do with the remaining 4.6 billion common shares in that ACS raise? Assuming the PCMC backdoor listing goes through and assuming that PRIM hasn’t sold any additional shares in a private placement (more on that in a bit), PRIM will have around 2.4 billion common shares outstanding.

That means they’d have 191% of their outstanding shares unsold and unissued but authorized for sale. What’s the purpose of this after the backdoor listing? It’s not even super clear what PRIM and PCMC plan to do post-transaction (except definitely not banking stuff, thanks to their articles revisions), nor what buyers PRIM might be contemplating for those strangely ominous 300-million shares “private placements” for “liquidity” that have been pre-authorized.

It feels like I’m watching a Korean movie with the subtitles off: I get the basic feelings that the actors are trying to portray, but I’m wooshing hard on the finer details and it probably won’t make a whole lot of sense until sometime after it’s all over.

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