Merkado Barkada
October 23, 2024 | 11:31am
The board of Prime Media Holdings [PRIM 2.85 ?10.5%; 132% avgVol] [link] approved two private placements with Valiant Consolidated Resources and Cymac Holdings Corp worth an aggregate of P531 million. The transactions are for PRIM common shares at a price of P2.95/share. PRIM’s board also approved a P531 million loan to its subsidiary, Philippine CollectiveMedia Corporation (PCMC), “to acquire key assets necessary to expand its business operations nationwide”. PRIM is owned by Martin Romualdez.
MB BOTTOM-LINE: I know quite a few investors who jumped into PRIM hoping to monetize the company’s crony contacts (Mr. Romualdez is the President’s cousin and the current House Speaker), but this seemingly “obvious” crony play has taken a long time to unfold. The stock price tanked to the P1.60 range after Mr. Marcos was elected President in 2022, and while the long-term chart shows higher highs and higher lows, the price has bounced around quite a bit. Many who purchased in the mid-2022 rush are still underwater at PRIM’s current price, and most of those who purchased in the secondary pump through the first half of this year are underwater as well, some quite significantly. This highlights a danger of playing the crony game. It’s not automatically clear whether the interests of the crony are aligned with the interests of the minority shareholders. Presumably, minority shareholders want stock price appreciation or dividends, but these things might not even be in a “Top 5 Things That Mr. Romualdez Cares About” list with respect to his ownership and management of PRIM and the pursuit of its opportunities. It can take great mental gymnastics to understand the orbits of the planets if we don’t know what center of mass they’re circling.
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