Anyare Hans Sy? ChinaBank had committed to ‘fully subscribe’ to DITO’s P8B SRO flop

China Banking Corp. (CHIB)) chaired by bilyonaryo Hans Sy had fully committed to buy all of DITO CME Holdings’ P8 billion stock rights offering (SRO) as the sole underwriter of the aborted fundraising of debt-burdened businessman Dennis Uy.

Based on the terms and conditions of the DITO SRO, CHIB, through its investment banking arm China Bank Capital, committed to buy any shares not taken up by institutional investors “to ensure that the offer shares are fully subscribed.” Uy’s PH Resorts Holdings, which is building a casino hotel in Cebu, owes P6 billion in loans to CHIB.

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DITO CME president Ernesto Alberto blamed the SRO flop on the poor demand from institutional investors – such as government and private insurance and pension funds, mutual and funds and investment banks, and private equity investors.

“The retail investors came through but institutions chose to stay on sidelines due to the bearish market environment,” Alberto said in an interview with the Inquirer.

Institutional investors were supposed to take up shares that were not bought by DITO shareholders after the mandatory two rounds of offering. CHIB offered the shares to institutional investors for two business days.

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Uy’s Udenna, which controls 71 percent of DITO, had declared in its prospectus that it would not participate in the two-round offer for shareholders to “provide maximum availability to minority shareholders.”

But Udenna also committed to CHIB that it would buy all SRO shares “that remain unsubscribed after the institutional offer to ensure that the offer shares are fully subscribed.”

In case Udenna does not buy all shares left in the institutional offering, CHIB was obliged to buy the unsubscribed shares.

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A Bilyonaryo source said there was no reason to cancel the SRO, specially four days after the January 25 deadline when all payments have been made, based on CHIB’s underwriting commitment. “That is the puzzling thing about this case and China Bank has a lot of explaining to do,” the source said.

DITO said it would probably revive the aborted SRO by July or August. Uy’s business expanded exponentially under the term of President Rodrigo Duterte (Uy is one of the biggest campaign sponsors of Duterte) who will step down on June 30.

DITO, which offered 1.64 billion shares at P4.88 each, had extended the SRO period by one week to January 25.

DITO will use the bulk of the proceeds or P6.345 billion as additional capital for the commercial rollout of its telecommunication business in January. The remaining P1.586 billion will be used for general corporate purposes.

The SRO would have diluted Uy’s stake in the company from 79.8 percent to 71.45 percent while the public float would increase to 28.28 percent from 20 percent.

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