China Banking Corp. (CHIB), controlled by Hans Sy, has completely committed to buy all of DITO CME Holdings’ P8 billion stock rights offering (SRO) as the only underwriter of Dennis Uy’s failed fundraising.
According to the rules of the DITO SRO, CHIB, through its investment banking arm China Bank Capital, agreed to buy any shares not purchased by institutional investors “to ensure that the offer shares are fully subscribed.” Uy’s PH Resorts Holdings, which is constructing a casino hotel in Cebu, owes CHIB P6 billion in loans.
DITO CME president Ernesto Alberto blamed the SRO failure on a lack of demand from institutional investors, which included government and private insurance and pension funds, mutual and funds and investment banks, and private equity investors.
“Retail investors came through, but institutions preferred to sit on the sidelines due to the gloomy market backdrop,” Alberto told the Inquirer in an interview.
After the obligatory two rounds of offering, institutional investors were intended to buy the shares that DITO stockholders did not buy. For two business days, CHIB made the shares available to institutional investors.
Uy’s Udenna, which owns 71% of DITO, stated in its prospectus that it will not participate in the two-round offer for shareholders in order to “give maximum access to minority shareholders.”
Udenna, on the other hand, promised CHIB that it would buy all SRO shares “that remain unsubscribed after the institutional offer to ensure that the offer shares are completely subscribed.”
If Udenna does not purchase all of the remaining shares in the institutional offering, CHIB is obligated to purchase the unsubscribed shares.
According to a source, there is no reason to cancel the SRO, especially four days after the January 25 deadline, when all payments have been received in accordance with CHIB’s underwriting pledge. “That is the perplexing aspect of this issue, and China Bank has a lot to explain,” the insider said.
DITO stated that the canceled SRO would most likely be resurrected by July or August. Uy’s business grew enormously during the presidency of President Rodrigo Duterte (Uy is one of Duterte’s largest campaign sponsors), who will stand down on June 30.
DITO had extended the SRO period by one week to January 25th, offering 1.64 billion shares at P4.88 apiece.
DITO would use the majority of the revenues, or P6.345 billion, to fund the commercial launch of its telecommunications company in January. The P1.586 billion remaining will be used for general corporate purposes.
The SRO would have reduced Uy’s ownership in the company from 79.8 percent to 71.45 percent, while increasing the public float from 20 percent to 28.28 percent.
Source: Bilyonaryo