Basic Energy auctioned off 450-M of delinquent shares to its owner at a premium

Basic Energy [BSC 0.20 up 7.7%; 891% avgVol] [link] disclosed that it sold 450 million delinquent common shares to a company called Ecology Energy Corp. (EEC) at a public auction yesterday. The sale was completed at a per-share price of P0.2888, which was at a 57% premium to BSC’s previous day close of P0.183/share. The sale raised P130 million in cash for BSC. EEC appears to be owned by the Villavicencio Family, who also own and control BSC.

MB bottom-line: BSC has over 14.5 billion outstanding shares, so this 450 million batch is only a 3% stake in the company. While the market clearly liked the move (the stock was up almost 8% on the day), big block sales like this for prices that seem decoupled from the prevailing market price can feel a little confusing. I wish I had attended the auction to see how it progressed, to see if there were any other people there at the lawyer’s office to bid up the price. Anyway, the “market price” of BSC is still what people will pay for shares of BSC on the open market, not what the owner will pay to his own company for a 3% stake. Still, this is a positive signal for BSC, or at least, not a negative one.

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.

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.