LISTED FIRM Basic Energy Corp. has removed from its P2-billion follow-on offering, a clause that gives existing shareholders preferential treatment to buy the new shares.

In a disclosure, Basic said its board on Wednesday deleted a clause that allows for the “special allocation of shares” to current shareholders.

Basic Vice-President and Corporate Secretary Corazon M. Bejasa on Thursday told BusinessWorld that this meant that the sale of 5.5 billion new shares, valued at P0.38 apiece, would be a “pure public offering.”

“If a stockholder wants additional shares, he will have to buy directly from the market [Philippine Stock Exchange],” she said.

She declined to divulge how many shares were supposed to have been covered by the special allocation.

The Securities and Exchange Commission (SEC), whose approval the company said it sought last December, does not have a decision yet on the follow-on application.

SEC Secretary Gerald M. Lukban said in general, company stockholders are required to sign a waiver for preemptive rights prior to any offering.

“Preemptive rights are a built-in right but if you give existing shareholders preferential treatment, the shares will not be diluted,” he said in a phone interview.

“Whether it’s an initial public offering or a follow-on offering, you have to [waive that right]. This is to level the playing field. It’s done precisely because it presupposes that you are offering these issues to a larger market,” he added.

Mr. Lukban further said Basic’s application was still pending with the SEC’s Corporate Finance Department.

“It’s still for comment. But if it’s compliant [with requirements], has no deficiencies, it can be presented to the commission en banc. A decision could be made within a week when it gets to the en banc,” he said.

BDO Capital & Investment Corp. is the lead underwriter for the follow-on offering.
Earlier, the SEC approved an increase in the company’s authorized capital stock from two billion shares to 10 billion shares.

In the same disclosure, Basic said its board also endorsed a separate SEC application to register 537.5 million shares subscribed under the capital hike.

Basic is raising funds for its bioethanol and renewable energy projects.

Although it is currently an oil exploration company, the company has disclosed plans of developing its “green oil” business sector.

This new corporate strategy will enable it to be one of the major players in the biofuels industry, an emerging growth sector in the Philippine economy, the company Web site states.

Basic recently bought into a Davao-based bioethanol company that is expected to produce 200,000 liters of the product daily by next year, in time for the mandated 5% bioethanol blend for gasoline. Together with its subsidiary, Basic is also planning to put up two fully integrated bioethanol plants.

Basic shares on Thursday closed 4.17% stronger to P0.25. — M. K. C. Conti/BusinessWorld

Source: http://www.gmanetwork.com/news/story/77913/economy/basic-modifies-terms-of-p2-b-shares-offer