DITO issues new shares to unnamed buyer<\/strong><\/p>\n\n\n\n Trading of DITO CME Holdings Corp. (DITO)’s shares was suspended earlier this week following a disclosure that it is issuing 1.6 billion new shares out of its unissued authorized capital stock to an unnamed unrelated third party. The transaction was priced at P1.00 per share, and will result in the buyer taking a 10.2% stake in DITO.<\/p>\n\n\n\n Who is the Mystery Man?<\/strong><\/p>\n\n\n\n In its disclosure submitted to the PSE yesterday, DITO announced that two, not just one, companies bought their shares. The two companies were Xterra Ventures Pte. Ltd. and Summit Telco Corporation Pte. Ltd., both registered in Singapore.<\/p>\n\n\n\n DITO’s disclosure gave more details about the sale, mentioning that \u201cunrelated third-party subscriber Xterra Ventures Pte. Ltd.” bought P610 million worth of shares, while another “unrelated third party subscriber Summit Telco Corporation Pte. Ltd.” acquired P1.59 billion worth of shares. <\/p>\n\n\n\n Interestingly, Summit Telco was created and registered as a company in Singapore just two months ago, while Xterra Ventures was established two years ago. There are no clear reports yet on who are the actual owners of these two companies.<\/p>\n\n\n\n Previously the grapevine was rife with rumors as to the identity of the buyer, ranging from Speaker Martin Romualdez\u2019s RYM Business Management Corp., which recently entered into a partnership with disenfranchised ABS-CBN, to the Chinese government through multiple layers of corporate ownership which will help contravene the foreign ownership limitation. Other names have been floated, but most of the major business tycoons have made it clear that they would rather not enter into the intensely competitive telco space. <\/p>\n\n\n\n Easing in a white knight? <\/strong><\/p>\n\n\n\n DITO narrowed its losses to P3.2-Billion in the first half of the year, from P15.4-Billion in the same period last year. This was made possible by a 63.6% jump in revenues, coupled with an 11.5% decrease in cash expenses and around P7.4-Billion in forex gains. The losses added up to the company\u2019s capital deficiency, which stood at P31.1 Billion by end of the first half. Obviously, DITO is in desperate need of a capital infusion, and speculation abound that a white knight will soon buy the remaining unissued authorized capital stock to eliminate this capital deficiency.<\/p>\n\n\n\n Next stop: a normal balance sheet<\/strong><\/p>\n\n\n\n Whoever owns or is running the two acquiring companies, should DITO decide to use the last of its ammo and issue the remaining 24.4-Billion shares to eliminate the capital deficiency, it will eventually result in Udenna holding 28.0% of DITO, while Mystery Man takes 64.9% and leaves 7.1% to the public. <\/p>\n\n\n\n Sounds like a follow-on offer is in order to take the public float back up to the minimum float requirement, but will there be appetite for DITO shares in the market?<\/p>\n\n\n\n