Philex offers treasury shares to public

In a move seen to appease the Social Security System (SSS) and other investors, Philex Mining Corp. has decided to offer its treasury shares to all shareholders instead of selling to a single block of investor, the First Pacific Co. Ltd. of Hong Kong.

In a disclosure to the Philippine Stock Exchange yesterday, Philex said any unsubscribed shares after the rights issue will then be sold to First Pacific, the parent firm of Metro Pacific Investments Corp., at P7.92 each share, the same price to be offered to Philex shareholders.

Philex said stockholders can purchase one share for every four shares held as of record date Oct. 30, 2008.

Renato N. Migriño, Philex vice-president for finance, pointed out that the shares will be offered on a pro-rata basis. “We decided that the shares should be offered to all shareholders so they can exercise their pre-emptive rights,” he said.

The offering, which involves 778.645 million treasury shares (equivalent to around 20 percent of the company), will run from Nov. 5 to 19. Philex estimated it could raise around P6.167 billion from the sale.

In addition to the rights issue, Philex will undertake a primary issuance of shares at a later date.

The company’s decision to instead undertake a rights issue was intended to address the concerns raised by state pension fund SSS.

The SSS, which is the single biggest shareholder of Philex with its 18.4 percent stake, objected to the sale to First Pacific arguing the shares should first be offered to them to allow them to exercise their pre-emptive rights.

In a letter to the SSS, Philex chairman and chief executive officer Walter Brown pointed out that no other shareholder has come forward with a similar position as First Pacific nor has there been any desire expressed to buy shares at P7.92 which is understandable since it is possible to buy at lower prices.

The offer price represents a 10 percent premium over the acquisition cost of Philex which shares have been accumulated as part of its completed share buyback program and which are currently held in treasury.