Bourse hands off in dispute between mining firm, govt exec
13-OCT-2008 Intellasia | GMA News
Oct 13, 2008 - 7:00:00 AM
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The Philippine Stock Exchange (PSE) refuses to be involved in the corporate battle involving stakeholders of publicly-listed Philex Mining Corp.
PSE President Francis Ed. Lim said the Securities Regulation Code mandates that intra-corporate disputes should be taken to local courts.
"This is a legal matter. As a principle, the preemptive rights apply to primary issuance. The right of first refusal applies only if the articles or the by-laws so provides," said Lim, who is a corporate lawyer.
The conflict between Social Security System Chief Executive Romulo Neri and the Philex directors will be resolved according to the by-laws of the company.
"I cannot make judgments, this is just my legal opinion as a lawyer," Lim clarified.
He added the right of first refusal should be specifically provided under the company's by-laws. Shareholders have the right of first refusal for preemptive rights, unless it is specifically denied in the company's article of incorporation.
Philex chair and chief executive Walter W Brown told Neri in an October 7 letter that the firm's corporate secretary and its legal counsels has cleared that the disposition of shares acquired in treasury "is not subject to the pre-emptive rights' rule."
Earlier, Philex disclosed that that it signed an agreement to sell a 20.16% stake or 778.44 million common shares for P7.92 each or a total of P6.165 billion to Hong Kong-listed First Pacific Co Ltd The price carries a 10% premium over the acquisition cost of Philex, the shares of which have been accumulated as part of its completed share buyback programme and currently held in treasury.
Under the agreement, First Pacific will be entitled to two board seats upon the completion of the transaction. Manuel V. Pangilinan, First Pacific managing director, will be nominated to take the first of the two board seats.
Brown also told Neri that despite the "wide publicity given" to the transaction, "no other shareholder has come forward with a similar position nor has there been any desire expressed to buy shares at P7.92, which is understandable since it is possible to buy at lower prices. As I write this letter, the transactions are at P6.80."
The Philex chief said he "failed to see the logic" in the pension fund's request to get the right of first refusal for the preemtive rights.
Philex on Wednesday told the PSE that six out of seven directors wanted Neri off the company board "due to his violation of his fiduciary duties."
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