Delayed DITO CME offer signals ‘lack of confidence’

The company’s decision appears to jeopardize PSE’s credibility to conduct SROs

Through Arjay L. Balinbin, Senior Reporter

A LACK of investor confidence in DITO CME Holdings Corp. or a tepid market may have led to its 8 billion peso deferred stock rights offering (SRO), analysts said, as they weighed the implications of the company’s decision.

“Definitely, that’s it (sign of lack of confidence in DITO CME). But to put it more politely, it should do more to attract more investors by reaching out to the investing public and fund managers,” said Astro C. del Castillo, chief executive of First Grade Finance, Inc., during of a telephone interview on Sunday. .

The Philippine Stock Exchange (PSE) said in a notice on Saturday that “DITO CME management has determined that current market conditions are less than ideal to pursue the offering.”

DITO CME said it would refund “all subscription payments made by any existing shareholder or qualified institutional purchaser during the offering period of the rights offering.”

As a reminder, the company announced on January 18 that it had received regulatory approval to extend its SRO until January 25, allowing more qualified investors to obtain additional shares at an “attractive discount”.

He said the extension was granted “due to numerous requests from shareholders who were unable to take up the offer or receive their SRO kits on time due to logistical difficulties caused by the outbreak of COVID-19 ( coronavirus disease 2019).

DITO CME has offered a total of 1.64 billion ordinary shares, at a price of P4.88 per share. The offer price was an 18.4% discount to the January 13 closing price.

DITO CME President Eric R. Alberto said the proceeds would be used to “fund our nationwide telecommunications services in accordance with technical audit requirements, and to fulfill our own mission to be a telecommunications company.” compelling and competitive alternative serving the Filipino public.

In a phone message, Diversified Securities, Inc. stock trader Aniceto K. Pangan said the cancellation of the SRO could be a sign of lack of confidence in DITO CME.

“It’s possible that after the stock price peaked over P20, it’s only going down to P5 per share now,” he said.

Shares of DITO CME closed down 1.17% at 5.08P each on Friday last week. The company owns 54% of DITO Telecommunity Corp.

“I think there was a lack of more relevant information from the company about the future prospects, but I understand because it’s just a startup,” Mr. Del Castillo said. .

But Anna Corenne M. Agravio, equity analyst at Regina Capital Development Corp., said in a separate phone message: “I don’t think that automatically translates to a lack of confidence in DITO.”

“I would say that is more reflective of the current sentiment of the market in general. Perhaps DITO weighed the costs of running an SRO in the midst of the pandemic and generally dampened general sentiment about how much proceeds it could raise to fund its expansions, then decided it would eventually best to postpone the offer,” she added. .

She noted that trading had been relatively anemic in recent weeks.

“Based on the index, it looks like investors remain cash-rich for now, which could also result in a rotation from the more volatile second and third lines (like DITO) into index names between -time.”

Business world tried to reach out to DITO CME to get his side.

Additionally, the PES said its Saturday announcement should not be construed as an endorsement of DITO CME’s postponement of the bid.

“This is without prejudice to any regulatory measure which [the] The Exchange may sue in order to ensure full compliance with applicable rules and for the protection of the investing public in accordance with the Exchange’s mandate, as a self-regulatory organization, to maintain a fair and orderly market. he adds.

DITO CME’s action, according to Mr. Pangan, could have a negative impact on future offers.

“If PSE approves[d] about it after the offer has been made, then the credibility of [the] PSE to make an offering will be stained or challenged,” he said.

“A number of investors have already sold their DITO shares after the ex-date on which the offer price was set. They will use it as payment for their share rights in case of cancellation, then instead of winning from the share rights offering, the investors will bear the losses, which will negatively affect the investors’ interest,” he added.

COL Financial Group, Inc. Senior Vice President April Lynn C. Lee-Tan disagrees that DITO’s action will affect investor interest in future offerings.

“No, it shouldn’t. While it’s true that market conditions are tough, the numerous IPOs (IPOs) and follow-on offerings of the past two years imply that as long as a company has good business and sells stock at a valuation reasonable, there will be demand,” she said in a phone message.

Ahead of its announcement on Saturday, the PES said on January 27 that it had penalized the company for “failing to meet the requirements of the rules”.

DITO CME manages the investments of Udenna Corp. in media, communications, entertainment and information technology.

It has three digital companies: Unalytics, which provides managed analytics services; Acuity Global, which manages media properties across all platforms and provides media planning and buying; and Luna Academy, an online training platform aimed at equipping users with future-ready skills, credentials and certificates. — with entries from Keren Concepcion G. Valmonte

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