June 03, 2014

SECB bares details of preferred SRO

In a disclosure to the Exchange last Friday, Security Bank (SECB, Buy) released the details of its upcoming preferred stock rights offering (SRO). Each common shareholder will be entitled to subscribe to one preferred share at P0.10/sh. The bank therefore expects to issue up to 602.8m preferred shares, with gross proceeds of up to P60.3m. The ex-date for the rights will be on 11 Jun 2014, while the offer period will last from 23 Jun 2014 to 4 July 2014.

Our take: The bank expects local investors to take much of the upcoming offering. This will provide some relief to the bank’s foreign ownership which has reached 38.8% as of 1Q14 and is very close to the 40% limit. The preferred SRO is therefore expected to lower the bank’s foreign ownership level. This bodes well for the bank, as it will allow foreign investors to buy more of the common shares without breaching the foreign ownership limit.– WealthSec