SEC okays spinoff of PSE’s property assets

The Securities and Exchange Commission (SEC) has allowed the spin-off of the Philippine Stock Exchange’s property assets into a wholly-owned company that would be detached from the planned listing of the Exchange after its demutualization.

SEC Chairman Lilia Bautista said a new company (NewCo) will be set up to integrate the assets of two donated properties, the Tektite and Ayala floors, subject to the consent of the donors.

The two properties were donated to the newly-formed PSE in 1994 by Philippine Realty & Holdings Corp. (Tektite) and Ayala Land Inc. (Ayala Tower) as part of the functional merger agreement between the two existing stock exchanges (Manila and Makati) then.

Initially, the PSE wanted the two properties included in the valuation of its assets, as the bourse has started to demutualize by converting from a non-stock, exclusive membership club to a stock corporation that will be opened up to the public.

But the SEC objected to the inclusion of the value of both donated properties in the stock corporation and instead batted for their transfer to a new company which will then issue shares to the PSE members.

Moreover, should the donors disagree with the transfer, the PSE will defer the said integration into a NewCo until the expiration of the restrictions on the deeds of donation, or until 2004. By that time, the PSE would have merged and moved to its new headquarters at the Bonifacio Global City along with government agencies such as the SEC, Department of Finance, Department of Trade and Industry and the Board of Investments.

Bautista said with the exclusion of the donated properties, the net value of the demutualized exchange would be brought down to around P205 million. With 184 member-brokers included in the PSE roster eligible for share allocation, each will be entitled to only P1.1 million instead of the original P8-million share valuation for each member computed by the PSE.

Also, external auditors SGV & Co. had informed the PSE that based on the historical cost as recorded in the books of the Exchange, the assets that will be transferred to NewCo would amount to about P361 million. Tektite has a book value of P141 million while the Ayala property carries a historical cost of P220 million.

Based on an appraisal report by Cuerbo Appraisers Inc., the fair market value of the two properties as of November 2000 amounted to P339 million for Tektite and P418 million for the Ayala unit.