As reported by Bilyonaryo [link], Finance USec. Domini Valasquez said that the Department of Finance (DoF) is considering the sale of 145 million shares in Semirara Mining and Power [SCC 33.35, down 1.5%; 316% avgVol] as part of the DoF’s drive to raise P42 billion this year through privatization efforts. The government’s stake in SCC is worth P4.8 billion at the stock’s current market price. SCC dropped 1.5% on the news, led by heavy foreign selling on fairly significant volume.
MB bottom-line: This transaction is probably going to be a block sale since the amount would take more than six months to sell at SCC’s average daily volume and would have a significant (negative) impact on SCC’s price and the DoF’s eventual proceeds if it decided to try this on the open market. Just as an aside, it’s crazy to think that the DoF made P507 million in dividend income off of these shares so far this year. Not bad! Perhaps the DoF is looking forward to the long-term coal price projections, has done the cost-benefit analysis, and has determined that the opportunity cost of holding on to these shares is too high relative to what it can accomplish elsewhere. Or, perhaps the DoF has marching orders to boil away all of its non-core holdings. Either way, 145 million shares is about 3.4% of SCC’s outstanding shares, so the sale is significant.
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