In a press conference, SEC associate commissioner Fe Eloisa Gloria told reporters that the commission en banc decided on a more congenial approach and write to the PSE instead of issuing a direct order.
According to Gloria, the commission en banc met to discuss ISM’s request for the SEC to intervene when the PSE halted the transaction and required ISM to undertake either a rights offer or a public offer for the shares that Philweb was buying through a private placement.
Present in the meeting were SEC’s three other associate commissioners: Edijer Martinez, Juanita Cueto and Joselia Poblador. SEC Chairman Lilia R. Bautista was not in the meeting.
"We issued an opinion because we didn’t want to sound combative," said Gloria. "But it is the opinion of the commission en banc and if they want a more categorical directive then we could always issue a direct order."
The letter in question was sent to the PSE and signed by Gloria on behalf of the commission en banc. Under the SEC rules, direct orders must be signed by all the members of the commission en banc.
In the letter, the SEC ruled that the private placement between ISM and Philweb was exempted from the PSE rules that would have required ISM to undertake a rights or public offer to allow ISM’s existing shareholders to avail of the discounted price that ISM was offering Philweb.
The SEC said ISM’s shareholders did not appear to be interested in acquiring any of the shares so ISM could proceed with the private placement and allow Philweb to buy into the company as per their memorandum of agreement.
Philweb chairman Roberto V. Ongpin said Philweb was abiding by the SEC directive and was proceeding with the full implementation of its MOA with ISM to effect the buy-in.
ISM had entered into an agreement with Philweb where the infotech firm would oversee the transformation of the mining company into an infotech company.
In exchange, Philweb was to buy into ISM through a private placement where Philweb would acquire ISM shares at a discounted price.
According to broker-members of the PSE, however, the transaction was not exempt from its rules on the listing of additional shares. The exchange ruled that in cases where there would be an anticipated demand for the shares among the company’s existing shareholders a rights or public offer is required. This meant that ISM would be required to undertake the rights or public offer to allow ISM shareholders to avail of the discounted price if they choose to subscribe to the offer.
The sudden interest in ISM, a perennial third-line issue at the PSE, was sparked by rumors that it was being targeted for backdoor listing by big companies that want to list at the exchange but did not want to go through the expense of undertaking a full-blown initial public offer.
ISM’s deal with Philweb squelched the rumors somewhat since Philweb itself is already a listed company.