Price is right

Which Makati-based listed firm, long known for its property holdings, has quietly asked its board to open the door to a new listing, even though no fresh money will be raised?

Nosy Tarsee’s boardroom snoops said the board met in a special session last Friday, after the corporate secretary had circulated the notice, because the matter could not wait for the regular calendar. A quorum was present throughout, so the resolutions stand.

The directors agreed to hire an investment bank, or any licensed investment house they would prefer, so that someone outside the family can say whether the plan makes sense.

The plan is a listing by way of introduction. That means no shares are sold to the public, no price is set by an offering, and no proceeds reach the company, although the shares become tradable once the exchange allows it.

The shares in question belong to a subsidiary that makes and sells industrial gases. This business quietly supplies hospitals, factories and shipyards because those customers cannot work without oxygen, nitrogen, and the like. The parent owns the stake now, but it intends to declare those shares as a property dividend so that its own stockholders receive them directly.

The parent’s investors would then hold two stocks instead of one, while the parent would lose an asset that has long supported its earnings. Is this unlocking value, or escaping a possible market discount?

The bank must check whether the unit meets the exchange’s listing and disclosure rules, since a firm that has never been public must show governance and a public float. It must weigh the tax cost, because a dividend in kind can burden the company and holders alike. It will then advise on valuation, structure, timetable and cost.

Directors also allowed the bank to see nonpublic data, provided that confidentiality is signed and insider trading laws are respected.

Note that the board did not approve the listing itself. It approved only the study, so the plan still needs a second board vote and, where the law or the company’s charter requires, a vote by stockholders.