FFI gets SEC nod for cut in capital stock

Publicly-listed mutual fund Filipino Fund Inc. (FFI) has secured the approval of the Securities and Exchange Commission for the reduction of its capital stock ahead of a corporate reorganization to spin off a new open-ended fund.

From a capital base of P850 million, FFI trimmed it down to P78.95 million, both from the same number of shares at P1 par value.

"The amendment will result to a reduction of 970 shares for every 1,000 shares currently held," FFI said in its notice to shareholders.

The company explained that it will use the reduction surplus to wipe out accumulated deficit and return the excess capital via a pro-rata distribution to all shareholders of new shares of stocks in the spin-off company, the Philippine Index Fund Inc. (PIF).

In addition, FFI shareholders will be entitled to participation certificates in a special purpose trust (SPT), a servicing fiduciary arrangement created solely for the administration of FFI’s unlisted/illiquid investments.

The PIF, meanwhile, is an open-end investment company/mutual fund intended to invest in the portfolio of index stocks at the Philippine Stock Exchange.

Based on the share distribution, for every 1,000 FFI share currently held, three PIF shares and 1,000 units of participation in the SPT will be given to the shareholders.

FFI said the unbundling of the asset holdings of the company will, in effect, improve the value of its shares and reflect on the underlying assets of the company.

"The listed equity assets will be spun off into an open-end fund that will seek to mirror the objectives of FFI but with the difference that instead of being a closed fund this will now be an open-end fund which will not be listed" FFI said.

Meanwhile, the non-listed equity investments and property holdings of FFI will be kept as a separate pool while FFI, with some other assets, will continue to be listed on the PSE.

FFI’s portfolio of listed equities include blue chips BPI, Ayala Corp., Ayala Land, PLDT, Meralco B, San Miguel B, First Philippine Holdings, SM Prime Holdings, ABS CBN Holdings, Globe Telecom, and Jollibee warrants.

It also has investments in unlisted share of stocks in Batangas Asset Corp., Roxas Land Corp. and Universal Leisure Club and property holdings with four office units at the Ayala Life FGU Bldg.

In addition, FFI has fixed income investments in Global Philippine Fund as well as in government securities.

To provide FFI with a reasonable amount of time to inform the trading public of the new fundamental values of FFI common shares and to distribute the new FFI shares, PIF shares and units of participation in the SPT to shareholders, the trading of FFI in the PSE will be suspended for 10 trading days starting tomorrow, March 17.