Philippine Estates Corp. plans P1.4-B SRO to buy properties from 'related parties'
The Gatchalian Family’s real estate development arm, Philippine Estates Corporation [PHES 0.54 17.39%] , is looking to sell 1,445,549,830 common shares at P1.00/share, in a stock rights offering (SRO) that will raise P1.445 billion.
The SRO will be available to all shareholders of record on December 2 (with the Ex-Date of November 26); the offer period will run from December 6 to December 13, with the eventual listing on December 24. The entitlement ratio is 1 SRO share for every 1 common share owned on December 2. Since the deal is 100% primary (new) shares, 100% of the proceeds raised will go to PHES, which plans to use about P1 billion to purchase properties owned by other Gatchalian Family companies. The rest will go to “General Corporate Purposes”.
PHES’s principal shareholder and the Gatchalian Family’s private holdco, The Wellex Group, plans to fully subscribe to its entitlement shares, as well as any of the rights shares that are not availed by the individual rights holders. The SRO price of P1.00/share is, as noted by the prospectus, a 92.2% premium over the “60-day VWAP of the Company’s Common Shares” pricing period that PHES said it would use from mid-August to mid-November. PHES said that because this is an SRO, there will be “necessary adjustments to the Company's share price and outstanding shares on the ex-date” .
MB BOTTOM-LINE
Just a good, old-fashioned capital call, forcing minority shareholders to defend their positions from 50% dilution. The Gatchalian Family will likely consolidate its holdings under The Wellex Group, since they’ve already said that they’d use this entity to mop up any stock rights portions that do not get purchased by minority shareholders. Not too much to say about this stock, except that PHES has had a couple of massive bull runs from around the P0.40/share level to to P0.80/share level, both times on very heavy volume. That last peak happened just after this SRO was announced, back in June, but the stock has since slid back into the P0.50/share range. As mentioned in my previous write-up when the SRO was initially announced, perhaps the ascendant Gatchalian Family is looking to make real estate hay while its political sun is shining.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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