SEC Compliance and Enforcement Department director Tomas Syquia told a press briefing that they will release their findings on the FLI transactions during the period from November last year to early February, when at least three identified groups heavily traded in FLI shares, ahead of the company’s announcement of a major buy-in by a Singaporean investor.
He said the initial report would track the involvement of one or two corporations in the deals, to be followed up later by the other entities in the identified groups.
"These findings could provide us the legal basis to pursue cases against these groups. But of course we have to follow the judicial process and give them the chance to comment, what do they have to say," Syquia said.
He added that if the SEC would not find the respondents’ reply satisfactory, then they would initiate the filing of charges, particularly insider trading activities.
Last month, Syquia said the SEC’s investigating team found three distinct groups dealt heavily in FLI during the period but have yet to firm up the possible cases of insider trading on the stock.
Last Feb. 5, FLI disclosed to the Exchange that it had issued P1.2 billion worth of convertible bonds to Reco Grandhomes Pte. Ltd, a company managed by GIC Real Estate Pte. Ltd. of Singapore, a subsidiary of the Government of Singapore Investment Corp. Pte. Ltd. which already owns 500 million shares or about 12 percent of FLI.
The announcement took market players by surprise since aside from having the option of converting into common stocks at any time within five years, the conversion price was pegged between P1.70 to P1.875 per share, or way below the stock’s prevailing market price then of P2.38.
As a result, FLI shares steadily slid below the P2-mark as investors dumped the stocks; however, the issue price has steadily recovered since then.
FLI earlier explained that the lower-than-market conversion price it has pegged on the convertible bond issue was fairly valued since it was based on a predetermined formula, given the stock market conditions at the time of negotiations.
Negotiations with Reco started in mid-December 2001 when the stock market was still in a slump. With an original target closing date of Jan. 15, 2002, the parties then projected that share prices would hover at P1.72, the average for the last two trading weeks of December.
FLI said it made the disclosure within the required timeframe under PSE regulations. While pricing negotiations were held in December, the transactions could not be considered final until due diligence, legal documentation and other matters were agreed upon and that any premature disclosure may have derailed the deal. – Conrado Diaz Jr.