What should I do with EDC’s Tender Offer? If EDC would be delisted soon, should I sell my stocks now? I have been asked these series of questions lately and I have only answered just now. Sorry about that, I was under the weather… I’m just a mere mortal that gets sick sometimes. But since malakas kayo lahat saken, here are my personal views about EDC tender offer.
Note that these are only my personal views and insights based from my personal preference, too. This may or may not apply to you because all of us are different even though all of us are investors. All of us have different objectives and goals. All of us manage risks differently. All of us have different portfolios.
First what’s happening here?
First Gen Corp.(FGEN) is selling up to 31.5 percent of subsidiary Energy Development Corp. (EDC) to the consortium of investment fund managers managed by Macquarie Infrastructure and Real Assets (MIRA) and Arran Investment Pte Ltd of Singapore-based GIC for P64.5 billion.
FGEN entered into an agreement with Philippines Renewable Energy Holdings Corp., which offered to buy up to 8.9 billion common shares of EDC, its renewable energy unit, for P7.25 each.
The offer represents approximately 23.5 to 31.7 percent of EDC’s total outstanding voting shares. The tender offer will run from 9 a.m. on Aug. 10 until 12 noon on Sept. 18. It can extend.
For those who know me already, I prefer things simple and I’m more of a passive investor. So to answer the questions below, here they are:
What should I do with EDC Tender Offer?
With EDC’s Tender Offer, I recommend accepting the offer and sell UNLESS you are a major stockholder of EDC, that’s a different scenario.
Why would I accept the Tender Offer or sell? Because I like things simple. With that 7.25 offer, I would gain already and considering the result of this Tender Offer, FGEN would benefit from it. If you have shares with FGEN, it could be a win-win for you.
I won’t care if I gain or not, I would still accept the offer. Why? Because like I said, I like things simple and I’m a passive investor. If I would keep my EDC stocks, I won’t have peace of mind and anything that costs me my peace is freaking expensive. I do not want that 🙂
Because I’m a passive investor, I do not want to exert too much effort contemplating what’s gonna happen with my EDC shares if the company is delisted or if ever it remains which I think doesn’t have much chance in this case. Passive income is earning something without doing much effort. In this situation, I could earn few gains of money and some things money can’t buy. Earning courage, managing risks, own decision making, peace of mind, experience and more besides.
Gain or not, I would still personally accept the Tender Offer or sell my stocks because of reasons number 2 and 3 below.
Will EDC be Delisted in the Stock Market?
For a company to be listed publicly in the Philippine Stock Exchange Index, it needs to maintain a public float of 15% or more. With FGEN’s selling its 31.5% minority EDC subsidiary, this will definitely reduce EDC’s public float. EDC has a free float level of 49.28%. It is expected to go down to 12.5% or worse 10%.
If EDC is delisted in the PSE Index, its price will likely go down so sell or accept the TO. There is a buzz that it will be delisted in the market, too. But it is only a speculation.
What does it mean if a company is delisted in the Stock Market?
If you have shares with EDC and it’s delisted publicly, it’s not gonna be easy for you anymore to sell your stock in a click of a mouse or using a broker. You would need to personally hire a security lawyer or comply with the SEC, file paper works or personally deal with your shares of stocks with EDC. More accounting works for you, more dealing with people, more transactions, too. I would have the pleasure to deal with those things if I’m a major stockholder, in this case I’m not.
Share your comments below and your decision with EDC. I’d like to hear them 🙂