Victorias Milling 100% stock dividend Record Date approved by SEC

Victorias Milling Company [VMC 3.62, up 20.3%; 421% avgVol] [link] disclosed that the Record Date for its 100% stock dividend has been approved by the SEC to be Sept. 17, 2024. The stock dividend to issue 2,742,050,564 new shares was already approved by stockholders back on Feb. 7, 2023, and the overall plan was approved by the SEC back on August 21 of this year. While this approval sets the Record Date, the actual payment date of the stock dividend is still unknown; VMC said that it is “still being finalized.” The stock dividend is intended to satisfy the PSE’s paid-up capital requirements to support an increase in VMC’s authorized capital stock (ACS) from P3.042 billion to P10.0 billion.

MB bottom-line:  This is actually a move that I’ve covered several times and even have a name for: the CLI Maneuver. I did a special “Inside the Boardroom” episode with the CFO of Cebu Landmasters [CLI] about their 2021 stock dividend to help explain the incentives behind a massive stock dividend like this. From the outside, a 100% stock dividend doesn’t seem all that useful: every shareholder doubles their shares but the overall value of what is owned remains the same. But the key thing in the CLI case (and presumably here in the VMC case) is that the company wanted to increase its authorized capital stock to give its management team something it could sell to raise funds, and the PSE rules require that any ACS raise is at least 25% subscribed and paid-up. This move does both through a cashless administrative procedure. I’m not sure why it took nearly 18 months to get approved by the SEC, but that’s just a matter of PSE life at the moment. It’s also not clear if the payment date decision is waiting on VMC or the SEC. This has been kind of a strange process. For more background on the CLI Maneuver, check out my Inside the Boardroom talk [link] with Grant Cheng, CLI’s CFO. It’s a long read but a good one to understand the cost-benefit analysis of the transaction from the company’s perspective.

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