Bourse quizzes Meralco after penalizing SMC

MANILA, Philippines - The Philippine Stock Exchange (PSE) asked the Manila Electric Co. (Meralco) to explain its shares’ price movement, two days after it fined San Miguel Corp. (SMC), one of its major stakeholders. Meralco was asked by the PSE to explain the volume and price movement of its shares after special block sales were conducted. Two days earlier, the PSE decided to penalize San Miguel Corp. for reportedly failing to disclose details about its stake acquisition in the electric company. Late last year, Southeast Asia’s food and beverage conglomerate paid P30 billion to own a 27 percent stake previously held by the Government Service Insurance System (GSIS). Meralco, the Philippines’ largest electric company, was asked to “explain and/or disclose if you know of any reason that would justify the run-up in the price of your company's shares," the PSE said in a memo posted at its website. Meralco said it had no idea of any reason for the run-up in the price of the company's shares. “We have no immediate information as to who are the persons or entities purchasing or investing in Meralco shares, much less of the reasons therefor," the company said. Data from the PSE showed that about P853-million worth of Meralco shares have been sold through special block sales in the past few trading sessions. Share price of Meralco, the country's largest electricity distributor, had also been climbing since January 21 when its shares ended at P58 each. In less than 15 trading days, Meralco shares had gone up at P75 each or about a 30-percent increase. On Tuesday, the company’s shares closed at P75. As of early session Wednesday, Meralco shares traded 3.3333-percent higher at P77.50 a piece. Next: San Miguel appeals to reconsider PSE fine San Miguel appeals to reconsider PSE fine Earlier, San Miguel has requested the PSE to reconsider a fine the company received after it reportedly failed to disclose details of its Meralco stake acquisition. In a letter to the PSE, Southeast Asia’s largest food and beverage company asked the regulator to withdraw the fine and suspend additional penalties while its appeal remains pending. The P50,000 fine will incur a penalty of P1,000 per each trading day delay, the PSE said in a February 9, 2009 letter addressed to San Miguel, citing the bourse’s rules. The PSE had no merit in penalizing San Miguel since it failed to specify that the company was required to disclose the actual signing of its purchase agreement with the Government Service Insurance System (GSIS). “Were specifying the specific date of the signing of the SPA (Sale and Purchase Agreement) been critical, in the view of PSE, it would have been fairer if PSE just clearly and simply stated so immediately or soon after we submitted our November 5, 2008 reply. As it was, PSE did not require us to indicate the signing date as an additional item of information," the company said. “It was only after the lapse of more than two and a half months, or on January 29, 2009, that the PSE for the first time asked us to state the date of the signing of the SPA. We confirmed the same immediately on the same day. Now, we are taken to task for the alleged failure to disclose the date of actual signing. We submit that based on the above antecedent circumstances, it would not be fair and equitable to impose a fine," added San Miguel, which earned P20.9 billion from January to September last year. The PSE has earlier warned that it will suspend the trading of San Miguel shares if it fails to settle the penalty within a month. Earlier, the bourse also cited rules which said that listed companies such as San Miguel should “promptly disclose not only the decision to carry out extraordinary investments," the PSE said in the same letter to company. The company should have also disclosed “financial or commercial transactions that might have a material impact on the listed company’s financial situation within 10 minutes from the receipt of such information or the happening or occurrence of said act, development or event," the same letter said. - GMANews.TV