why would apc management want to reduce the company's capital deficit via reduction in par value? here's what one internet source (see 4 below) tells us about why companies reduce their par value:
1. to support future dividend payments if the company is experiencing accumulated loss. Capital reduction will compensate for a deficit in retained earnings allowing the firm to pay dividends without waiting for current operating results.
2. to support capital increases by new investors
3. to encourage efficiency of capital usage, which consequently improves financial ratios (e.g., ROE, ROA, total asset turnover) and increases the company’s attractiveness among investors.with the reduction in par value and capital deficit, however, i reckon that apc still wont be declaring dividends in the coming days/months ... thus i can only assume that apc"s capital restructuring exercise is in preparation for new investments ... either by old investors or new ones ... either way ... whether it is declaring divs or new investments/investors ... these could only mean well for the shareholders of apc ...
previous APC monitor: The Ninja Stock Monitor: APC (04 jan 2013)
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1 - Amendment of Article Seventh of the Articles of Incorporation of APC Group, Inc. by reducing the par value of its common shares from P1.00 to P0.35
2 - Additional information re: Board approval of reduction in par value
3 - apc 3rd quarter 2012 financial report
4 - Benefits of capital reduction
