Metro Global parent pays down debts with shares to avoid delisting

Metro Global Holdings [MGH suspended] [link] has avoided being automatically delisted by the PSE for its persistent violation of the exchange’s minimum public ownership rule. MGH had until Monday morning to raise its public float to at least 10% to avoid triggering the PSE’s automatic delisting process. It appears as though MGH brought itself into compliance with the rule by assigning 55 million shares of MGH to “a third party investor”, Smart Share Investments Limited (SSIL), which the companies considered as partial payment of a debt owed by Fil-Estate Management (FEM), MGH’s parent company, to SSIL. The transaction raised MGH’s public float to 10.67%, which is above the PSE’s 10% minimum. The PSE indicated that MGH will no longer be automatically delisted, however, it is still suspended, as it has been for nearly two decades, for its reporting failures.

MB bottom-line: When I first saw the disclosure I was excited about the possibility that MGH had used the “Tricky Leviste” to bring itself into last-second compliance by giving away shares of itself for free to a technical “third party” that is really controlled by the owner’s mother. Alas, this was not the case. It’s a little bit convoluted, but here it seems like MGH’s parent company FEM partially paid a debt with some shares that it held in MGH. The transfer of those secondary shares from FEM (considered part of MGH’s ownership group) pushed enough shares into public hands to keep the stock listed. It’s still not tradeable (and it hasn’t been for 17 years), so Robert Sobrepeña (MGH’s owner) still has a lot of work to do to make things right by his trapped minority shareholders.

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