PROPERTY DEVELOPER Ayala Land, Inc. has moved to reduce foreign participation in the company by restructuring its capital in light of a stricter interpretation of equity limits.

In a disclosure, the company said its board of directors, following a regular meeting on Monday, approved a rights offer -- consisting of 13.043 billion voting preferred shares -- "in order to comply with the regulatory requirement on Filipino ownership following the Supreme Court’s recent ruling…".

The high court last year ordered the Securities and Exchange Commission (SEC) to refer to a firm’s voting shares in applying the constitutionally-mandated 40% foreign ownership cap, as opposed to outstanding capital stock that includes preferred, non-voting shares, in a case involving Philippine Long Distance Telephone Corp. (PLDT).

Ayala Land said it did not violate the foreign equity cap even under the stricter interpretation of the rule but preferred to give itself a wider buffer.

"Right now, foreign-owned voting shares number 38% as of end-January and we’re targeting a 19% foreign ownership after the issuance," Ayala Land investor communications and compliance head Pamela Ann T. Perez told BusinessWorld.

"We’re not in violation of anything but we’re already very close to the 40% cap. It’s always better to have leeway for foreign ownership. There are a lot of foreign funds investing in Ayala Land. And the only reason we’re doing this is in light of the Supreme Court ruling on foreign ownership," Ms. Perez said in a telephone interview.

The board agreed to buy back and then retire 13 billion outstanding preferred shares, a move that will decrease Ayala Land’s authorized capital stock by P1.3 billion. The buyback -- the bulk of the shares is owned by parent Ayala Corp. -- will be subject to shareholder approval at firm’s annual stockholders meeting on April 18, Ms. Perez said.

Ayala Land then plans to reclassify unissued preferred shares to voting preferred shares, 13.043 billion of which will be made available via a rights offer to common stockholders "under the same basic terms as the outstanding preferred shares", it said without citing prices.

The Supreme Court ruling cited by Ayala Land was in response to a case filed against index heavyweight PLDT, whose shares were reportedly in violation of the foreign equity limits.

PLDT has similarly moved to redeem preferred shares ahead of plans to sell 150 million new voting stocks to reduce its foreign equity level to 36% from 64%, according to previous reports. Mediaquest Holdings, Inc., a subsidiary of the Beneficial Trust Fund of PLDT, has a minority stake in BusinessWorld.

Ayala Land, meanwhile, went on to disclose that its board had also approved the issuance of P15-billion worth of corporate bonds, with tenors of seven and 10 years. Proceeds will be used to fund part of this year’s P37-billion capital expenditure.

The company also announced the issuance of regular first semester cash dividends worth 11 centavos per common share. The cash dividend will be payable on March 27 to shareholders on record as of March 7.

Shares of Ayala Land plunged by 3.72% to P20.70 apiece yesterday. -- F.J.G. de la Fuente

Source: BusinessWorld