DITO CME sells 1.59-B shares at par to mystery 'unrelated third party'

DITO CME [DITO 2.33, up 4.5%; 255% avgVol] [link], the holding company of Dennis Uy’s embattled telecommunications company, disclosed that it sold 1.59 billion unissued common shares to an “unrelated third party” for P1.00/share, to raise P1.59 billion in equity. The sale increased DITO’s outstanding shares by 11.3%, and assuming that the mysterious unrelated third party is actually a true third party, would increase DITO’s public float from 20.11% to 28.24%. The PSE halted DITO’s stock for one hour under the Additional Listings rule to give the investing public a chance to digest the news. When DITO trading resumed, the stock soared more than 4% in DITO’s biggest day of volume in almost a month. The sale of common shares at par value was at a 64% discount to DITO’s market price, and a 79% discount to the price that DITO planned to sell its stock rights offering to the public in early 2022 before it abruptly canceled the sale during the offer period.

 

MB bottom-line: On the one hand, selling a massive batch of common shares at a 64% discount to the market price is anti-retail and anti-minority, but on the other hand, if that’s the best price that DITO’s management could find on short notice and the raise helps the company remain as a going concern, then this could be something that the retail/minority holder could file in the “desperate times call for desperate measures” folder. I mean, it’s not like DITO itself didn’t tell us that it was going to try anything and everything to raise money to keep the lights on, and nobody holding DITO stock should be under the false impression that the company has the best interests of its minority holders at heart; there are simply too many examples of DITO doing sketchy things to give this company any benefit of the doubt when it comes to its fiduciary duties to its minority shareholders. Business journalist Miguel Camus is reporting from one of his sources that the buyer is a “Saudi-based group via a Singapore investment fund”, but I couldn’t help but be reminded of that sketchy midnight sale back in September of 2021 to a British Virgin Island-registered company called Loden Infra Technologies. Maybe this sale buys Mr. Uy some additional float that he can sell to himself to raise even more funding. Maybe that’s what got the market excited.  

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