San Miguel Brewery Inc. and PAL Holdings Inc. are among 25 companies that face a year-end deadline to have at least 10 percent of their shares trading publicly or be suspended by the exchange. Shares of San Miguel Brewery and parent San Miguel Corp. sank.
Listed companies that don’t meet the minimum by Dec. 31 will be suspended “immediately,” Philippine Stock Exchange Inc. Chief Executive Officer Hans Sicat said in a statement. Suspensions will last not more than six months as companies will be “automatically” de-listed if still non-compliant on June 30, he said. LT Group Inc., one of the 25 non-compliant companies, said it has boosted its public float to meet the rule, according to a stock-exchange filing released today.
The exchange, which revoked a minimum public ownership requirement in 2005, reinstated it in 2010 to boost trading, giving companies until the end of this year to comply. The Philippines bourse is the fourth-smallest among Asia’s major markets, with a $224.4 billion capitalization, according to data compiled by Bloomberg.
“Share prices of companies that don’t meet the requirement will be negatively affected because this could trigger investors to sell out of these stocks,” Paul Joseph Garcia, who helps manage about $18.5 billion as senior vice president at BPI Asset Management Inc., said by phone. “It could negatively affect overall market sentiments since what investors would like to see is a broader universe of investible stocks.”
Shares of San Miguel Brewery, the nation’s largest brewer, declined 2.9 percent to 33 pesos at the close of trading in Manila, the sharpest loss since June 1. San Miguel Corp., which owns 51 percent of the brewer, sank 4.6 percent to 101 pesos, the lowest close since Nov. 17, 2010.
San Miguel posted the second-biggest percentage loss in the benchmark Philippine Stock Exchange Index, which declined 1.5 percent, the sharpest loss since July 9.
The bourse had 25 companies that didn’t meet the requirement as of Dec. 7 including San Miguel Brewery, 48.4 percent owned by Kirin Brewery Co., and PAL, owner of Philippine Airlines Inc., the nation’s biggest carrier. The exchange had 42 non-compliant companies in 2010, Sicat said on Sept. 3.
San Miguel Brewery said today the exchange rejected its request to extend the deadline. PAL said Dec. 11 it will ask for an extension. San Miguel Brewery has a 0.6 percent public float while PAL’s is 2.3 percent, according to exchange data.
“There’s strong anticipation that a trading suspension and eventual de-listing of San Miguel Brewery will translate to lower valuation for the venture,” Alex Pomento, head of research at Macquarie Group Ltd.’s Manila unit, said. “San Miguel’s shares are reflecting the eventuality the brewery’s valuation is no longer market determined.”
LT Group, tobacco tycoon Lucio Tan’s holding company and one of the 25 non-compliant stocks in the bourse’s Dec. 7 list, said its majority owner Tangent Holdings Corp. has sold 508.54 million shares, boosting its float to 10.4 percent from 4.7 percent, according to the stock-exchange filing. The stock rose as much as 2.7 percent before closing unchanged at 12.60 pesos.
The tax bureau will next year charge a capital gains levy and document stamp tax on sales of shares in companies that don’t meet the minimum public ownership rule, the exchange said. The capital gains tax will be equivalent to 5 percent of net capital gains of as much as 100,000 pesos ($2,435), increasing to 10 percent on larger transactions. A separate document stamp tax of 75 centavo (about 2 U.S. cents) per 200 pesos of par value of shares will also be collected, it said.
Trading of shares on the exchange is subject to a tax, equivalent to 0.5 percent of transaction value, the exchange said.
“Some investors will press the panic button and sell their shares to avoid getting stuck with non-compliant stocks and dodge higher transaction costs,” said James Lago, head of research at PCCI Securities Brokers Corp. “Companies that want to remain listed will have to accelerate their plans to boost public float.”
Manchester International Holdings Unlimited Corp., which Melco Crown Entertainment Ltd. agreed to buy, and Metro Pacific Tollways Corp., the nation’s biggest tollroad operator, led declines among stocks that don’t meet the minimum float. Manchester’s Class A shares sank 10 percent while Metro Pacific Tollways, which volunteered to de-list its shares, retreated 8.2 percent.