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Stock Commentary

AC Energy approves name change, measures to lift foreign equity cap

Merkado Barkada
AC Energy approves name change, measures to lift foreign equity cap

On the superficial side, the AC Energy's [ACEN 11.98 2.44%] board decided to change the company’s name from “AC Energy Corporation” to “ACEN Corporation”. No change to the ticker symbol (“ACEN”). On the more substantive side, the board also voted to remove any mention of oil exploration mining, “and related activities”, from its primary and secondary corporate purposes, and to further specify “retail electricity supply” and “provision of guarantees” as components of its corporate purposes.

ACEN explained that the board removed the parts of its corporate purposes (oil and mining exploration) that “place the Company’s business under the purview of the Philippine foreign investment negative list”. Being on this list limits the foreign investment in ACEN at 40%, but stepping off of this list will lift that cap and permit additional foreign investment into the company which has already taken significant investments from foreign investors like Arran Investment (affiliated with Singapore’s sovereign wealth fund).

MB BOTTOM-LINE

From a pure supply/demand perspective, removing the 40% cap on foreign investment from ACEN’s stock will open up a much larger potential market for ACEN shares. Not so much in terms of daily trading, but more so in terms of the price that the Ayala Family and ACEN will be able to command for further chunks of ACEN stock sold to foreign investors through private placements. Sure, allowing foreigners to buy on the open market will help, but I feel like the ability to sell blocks of shares through private placement to foreigners is the real win here.

Not that I have any information to say that ACEN is trying to do this imminently, but if the company didn’t have any immediate plans for significant oil and mining exploration, it only makes sense to trim these purposes from its articles, lift the cap, and maximize its potential market. Power generation is one of the most capital-intensive businesses around, and further expansion is going to require additional cash (equity) to fuel the growth. 

 

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

AC ENERGY

AYALA CORP

PHILIPPINE STOCK EXCHANGE

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