DITO shares jump on talks with potential investors
DITO CME [DITO 2.90 1.69%] [link], the Dennis Uy-owned holding company that owns an indirect majority interest in Dito Telecommunity, saw its share price jump more than 9% in the first 15 minutes of trading yesterday, on rumors that DITO was in talks with potential investors to raise up to P8 billion in fresh capital.
There were even some whispers that one of those potential investors is actually the Government Service Insurance System (GSIS).
The bump from this news was short-lived, however, as DITO’s price faded significantly through the day, eventually snatching defeat from the jaws of victory by ending down 1.69% to P2.90/share.
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The amount that DITO is rumored to be trying to raise is around the same amount that it tried to raise earlier this year in that disastrous stock rights offering (SRO) that went so badly that the PSE had to convene emergency meetings with stakeholders to prevent something like that from ever happening again.
Remember when DITO canceled the SRO, after it had taken money from some shareholders, because of “market conditions”, and tried to play it off like it was no big deal because it could always tap that $4 billion in long-term debt that DITO had “secured” but was still negotiating?
Remember how we all pretty much knew the cancelation was from lack of interest?
Well, all of that happened back when the market was at the 7,200 level, and here we are, after having spent an uncomfortable amount of time with the market hovering in the 5900 level, with DITO skulking around behind the scenes looking for an investor.
I mean, it either needs the money or it doesn’t, and the company’s actions speak louder than its words.
If DITO had gone through with the SRO, though, there’s a pretty great chance those shareholders would be sitting on 40% losses right now. So, there’s one silver lining to this mess.
I’m just waiting for DITO’s Q3 financials to see if the degrading peso has caused any additional pain for DITO with respect to all of its US Dollar-denominated debt. DITO lost billions on its debt in H1, back when the exchange rate was somewhere between P51 and P55 per $1. It’s way worse than that now.
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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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