DITO prices FOO at P1.05/share

DITO CME [DITO 1.79, down 6.3%; 592% avgVol] [link] disclosed its follow-on offering’s (FOO) price at P1.05/share, which caused the PSE to halt trading in DITO’s stock for an hour to allow the public to consume the news. DITO will sell 1,953,500,000 primary shares to the public through the FOO. The revisited offer period will run from November 20 through November 26, and the FOO shares will list on December 6. At the time of the announcement, the FOO price was at a 45% discount to DITO’s market price of P1.91/share, but represents a 5% premium over the amount paid by Summit Telco last year when it acquired 3.3 billion common shares at P1.00/share. DITO’s management team has been authorized by its board to negotiate the price and timing of the sale of up to 9 billion common shares to Summit Telco in a deal that would cede control of the company from Dennis Uy’s Udenna to the mysterious buyer. 

MB bottom-line: At the time of DITO’s sale to Summit Telco in 2023, DITO inferred that it may have sold shares to Summit Telco at a price that was even cheaper than P1.00/share, but was prevented from doing so by the P1.00/share par value of its common shares. DITO justified that price by pointing to its negative per-share book value, which at the time was -P2.21/share. According to DITO’s Q3 Quarterly Report, its current per-share book value is now even worse, at -P3.08, and yet we’re supposed to eat a 5% premium? I can’t see this offering as anything other than a cynical way to (potentially) monetize whatever goodwill exists in this stock before Dennis Uy loses control to Summit. And speaking of the potential deal with Summit, since we don’t know the price of those 9 billion shares yet, there’s always the chance that FOO buyers could be absolutely rug-pulled by yet another sale to Summit at par. Same book, different chapter for this group. 

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