Sunday, March 18, 2012

regarding mer's property dividends

on 20 march 2012, mer's property dividend of 51% equity participation in the outstanding issued common stock of rockwell land corporation (the rock) goes exdate.

what does it mean for mer stockholders who will be recipients of the dividend?

for the sake of entertainment, let me posit the following wild scenario :) ...

on August 20, 2009, fph acquired Lopez Holdings’ 24.5% stake in Rockwell for 1.5 billion pesos. that places the rock's value then at around 6 billion pesos.

rockwell's net income in 2009 was 633.5 million pesos. in 2010 the rock earned 801.2 million pesos. for 2011, the company's bottomline target is 900 million pesos. finance manila member trxtan04 places 2012 projected income at 1 billion pesos.

so ...

6 billion (2009)
+ 633.5 m
+ 801.2 m
+ 900 m
+1 billion
= 9.3347 billion in equity (im making the wild assumption that the retained earnings will be converted to capital stock)

let me just round the figure off at 10 billion in equity. for simplicity's sake let's not include the 4 billion in corporate notes issued in may 2011 in the equation.

mer's 51% equity in the rock ... with 10 billion in equity ... assuming 10 billion in capitalization (10b shares @1 peso par value; 0 retained earnings), is equivalent then to 5.1 billion shares.

with mer having 1.127 billion shares, the property dividend therefore means giving mer share holders 4.52 rockwell shares for every 1 mer share, or 4.52 pesos in monetary terms (@1 peso par value per share).

op kors i could be wrong. this is just a wild attempt to monetise the 51% mer property divs.