Remarks C00243-2018

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATION CODE
AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported)
Jan 16, 2018
2. SEC Identification Number
AN092-002557
3. BIR Tax Identification No.
002-333-130
4. Exact name of issuer as specified in its charter
The Philippine Stock Exchange, Inc.
5. Province, country or other jurisdiction of incorporation
Republic of the Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
2nd Floor, PSE Plaza, Ayala Triangle, Ayala Avenue, Makati City Postal Code 1226
8. Issuer's telephone number, including area code
(632) 688-7600
9. Former name or former address, if changed since last report
2nd Floor, PSE Centre, Ortigas Center, Pasig City 1605
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common 73,424,636
11. Indicate the item numbers reported herein
Item No. 2. Acquisition and Disposition of Assets

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

The Philippine Stock Exchange, Inc.PSE

PSE Disclosure Form 5-1 - Substantial Acquisitions References: SRC Rule 17 (SEC Form 17-C) and
Section 4.4 and/or Section 5 of the Revised Disclosure Rules

Subject of the Disclosure

Signing of Share Purchase Agreements and Share Sale and Purchase Agreement (collectively, “SPAs")

On 15 June 2017 with BAP, for itself and on behalf of BAP Credit Bureau, certain member banks and other banks.
On 6 July 2017 with WTSI.
On 25 August 2017 with IHAP, acting for and on behalf of certain IHAP members.
On 26 September 2017 with Philam.
On 8 November 2017 with FINEX.
On 12 January 2018 with SMC.
On 15 January 2018 with TCS.
Background/Description of the Disclosure

The Company and Bankers Association of the Philippines (“BAP”), for itself and on behalf of BAP Credit Bureau, certain member banks and other banks (collectively, the “Sellers”), signed on 15 June 2017 an SPA (which was subsequently amended) whereby the Company agreed to purchase and the Sellers agreed to sell the Sellers’ 1,466,800 common shares of stock in Philippine Dealing System Holdings Corporation (“PDSHC”), equivalent to 23.47% of the total issued and outstanding stock of PDSHC.

The Company and Whistler Technologies Services, Inc. (“WTSI”) signed an SPA whereby the Company agreed to purchase and WTSI agreed to sell its 500,000 common shares of stock in PDSHC, equivalent to 8.00% of the total issued and outstanding stock of PDSHC.

The Company and Investment House Association of the Philippines (“IHAP”), acting for and on behalf of certain IHAP members, signed an SPA whereby the Company agreed to purchase and IHAP, acting for and on behalf of certain IHAP members, agreed to sell its 36,446 common shares of stock in PDSHC, equivalent to 0.5831% of the total issued and outstanding stock of PDSHC. On 12 November 2017, a Deed of Accession was signed by the Company and other IHAP members who agreed to sell their collective 350 PDSHC shares to the Company under the terms and conditions of the SPA. When combined with the PDSHC shares originally covered under the SPA, the total PDSHC shares to be sold by the IHAP members to the Company now totals 36,796 PDSHC shares, equivalent to 0.5887% of the total issued and outstanding stock of PDSHC.

The Company and The Philippine American Life and General Insurance, Co. (“Philam”) signed an SPA whereby the Company agreed to purchase and Philam agreed to sell its 250,000 common shares of stock in PDSHC, equivalent to 4.00% of the total issued and outstanding stock of PDSHC.

The Company and FINEX Research and Development Foundation, Inc. (“FINEX”) signed an SPA whereby the Company agreed to purchase and FINEX agreed to sell its 192,776 common shares of stock in PDSHC, equivalent to 3.0844% of the total issued and outstanding stock of PDSHC.

The Company and San Miguel Corporation ("SMC") signed an SPA whereby the Company agreed to purchase and SMC agreed to sell its 250,000 common shares of stock in PDSHC, equivalent to 4.00% of the total issued and outstanding stock of PDSHC.

The Company and Tata Consulting Services Asia-Pacific Pte. Ltd. ("TCS") signed an SPA whereby the Company agreed to purchase and TCS agreed to sell its 500,000 common shares of stock in PDSHC, equivalent to 8.00% of the total issued and outstanding stock of PDSHC.

All of the above-mentioned purchases shall be subject to the approval of government agencies, particularly the Securities and Exchange Commission (“SEC”) and Philippine Competition Commission (“PCC”), as required by law and regulation, and to the compliance with the provisions in the articles of incorporation of PDSHC.

As disclosed by the Company last 13 December 2017 through Circular No. C07465-2017, the proposed acquisition was deemed approved by the PCC as of 30 November 2017.
Date of Approval by Board of Directors May 24, 2017
Date of Approval by Stockholders May 2, 2015
Other Relevant Regulatory Agency, if applicable Securities and Exchange Commission
Date of Approval by Relevant Regulatory Agency TBA
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction

This transaction is envisioned to facilitate further growth in the local capital markets by introducing efficiencies in the trading and back office systems of both the equities and fixed income markets, among others. It is aimed at creating a better environment for the introduction of more products and services for the various market stakeholders, as well as the implementation of improvements in risk management processes.
Description of the transaction including the timetable for implementation and related regulatory requirements, if any

The purchase is subject to certain closing conditions which includes, among others, the grant by SEC of an exemptive relief to PSE to own more than 20% of an exchange and the approval by the PCC of the transaction.
Identities of the parties to the transaction
Name Nature of Business Nature of any material relationship with the Issuer, their directors/officers or any of their affiliates
BAP, for itself and on behalf of BAP Credit Bureau, certain member banks and other banks Trustee of individual bank shareholders of PDSHC None
Whistler Technologies Services, Inc. IT Services None
IHAP, acting for and on behalf of some IHAP members Association of investment houses None
Philam Insurance and wealth management None
FINEX Research, development, and improvement in the various fields of financial and business management None
SMC Operates in the food, beverage, packing, fuel, oil, energy, infrastructure and banking industries None
TCS Information technology consulting services None
Terms and conditions of the transaction
The nature and amount of consideration (e.g. price per share, the aggregate amount)

The Company shall acquire the PDSHC shares of the following entities at the price of PhP320 per share, with resulting total purchase prices as follows:

1. PhP469, 376,000.00 for the BAP, for itself and on behalf of BAP Credit Bureau, certain member banks and other banks.
2. PhP160,000,000.00 for WTSI.
3. PhP11,774,720.00 for IHAP, acting for and on behalf of some IHAP members.
4. PhP80,000,000.00 for Philam.
5. PhP61,688,320 for FINEX.
6. PhP80,000,000.00 for SMC.

The Company shall acquire the PDSHC shares of TCS at the price of PhP304.228 per share, or a total purchase price of Php 152,114,000.00.
Basis upon which the amount of consideration or value of the transaction was determined

Based on PDS’ adjusted equity value of Php2 Billion.
The number of shares to be acquired 3,005,596.00 common shares
Ratio/percentage to total outstanding capital stock 48.05
Terms of payment

SPA with BAP, for itself and on behalf of BAP Credit Bureau, certain member banks and other banks on 15 June 2017:
PhP 431,286,936.17 to be paid on Closing
PhP 38,089,063.83 to be held in escrow

SPA with WTSI on 6 July 2017:
PhP 147,016,936.06 to be paid on Closing
PhP 12,983,063.94 to be held in escrow

SPA with IHAP, acting for and on behalf of some IHAP members, on 25 August 2017:
Php 10,819,328.79 to be paid on Closing
Php 955,391.21 to be held in escrow

SPA with Philam on 26 September 2017:
Php 73,508,468.03 to be paid on Closing
Php 6,491,531.97 to be held in escrow

SPA with FINEX on 8 November 2017:
Php 56,682,699.70 to be paid on Closing
Php 5,005,620.30 to be held in escrow

SPA with SMC on 12 January 2018:
Php 73,508,468.03 to be paid on Closing
Php Php6,491,531.97 to be held in escrow

SPA with TCS on 15 January 2018:
Php 152,114,000.00 to be paid on Closing. A one-time payment arrangement at a discounted price was agreed upon with TCS given its status as a non-resident foreign corporation.
Conditions precedent to closing of the transaction, if any

(i) Issuance of necessary approvals by SEC in relation to the ownership of PDSHC and the purchase of shares; (ii) Approval of other relevant regulatory agencies as may be required by law, rule or regulations; and (iii) other conditions agreed upon in the SPAs.
Description of the company subject of the transaction
Nature and business

Holding company formed for the purpose of investing in or holding shares of stock in exchange as well as in one or more corporations which will provide depository, registry, clearing, settlement, custody, securities borrowing and lending, information technology and other support services for the exchanges or for the other exchanges of securities or monetary transactions or platforms.
Discussion of major projects and investments

N/A
List of subsidiaries and affiliates, with percentage holdings
Name % Ownership
Philippine Dealing & Exchange Corp. (PDEx) 99.95
Philippine Securities Settlement Corp. (PSSC) 97.72
Philippine Depository & Trust Corp. (PDTC) 99.99
PCD Nominee Corp. 99.98

Capital structure

Authorized capital stock
Type of Security Amount Number of Shares
Common Shares PhP750,000,000.00 7,500,000
Subscribed Shares
Type of Security Amount Number of Shares
Common Shares PhP625,000,000.00 6,250,000
Paid-Up Capital
Amount P625,000,000.00
Number of Shares 6,250,000
Issued Shares
Type of Security Amount Number of Shares
Common P625,000,000.00 6,250,000
Outstanding Shares
Type of Security Amount Number of Shares
Common P625,000,000.00 6,250,000
Par Value
Type of Security Amount
Common P100.00
Ownership Structure (including percentage holdings)
Name Number of Shares % Ownership
The Philippine Stock Exchange, Inc. 1,311,439 20.98
The Singapore Exchange Ltd. 1,250,000 20
Bankers Association of the Philippines for itself and as trustee of its Member Banks 829,000 13.26
BAP ITF Other Member Banks 611,439 9.78
Tata Consultancy Services Asia-Pacific Phils. Inc. 500,000 8
Whistler Technologies Services Inc. (formerly Computershare Technology Services Phils. Inc.) 500,000 8
San Miguel Corp. 250,000 4
The Philippine American Life and General Insurance Co. 250,000 4
Financial Executives Institute of the Philippines Research and Development Foundation 192,776 3.08
Development Bank of the Philippines 192,776 3.08
Social Security System 96,388 1.54
Citibank N.A. 96,388 1.54
Investment House Association of the Phils. (IHAP) ITF Members 69,758 1.12
BAP Credit Bureau Inc. 49,991 0.8
Golden Astra Capital Corp. 22,536 0.36
Bank of Tokyo - Mitsubishi UFJ - Manila Branch 12,500 0.2
Bangkok Bank Public Co. Ltd. 5,000 0.08
Korea Exchange Bank 5,000 0.08
Mizuho Corporate Bank Ltd. Manila 5,000 0.08
Nestor Tan 1 0
Cesar Crisol 1 0
Chng Lay Chew 1 0
Hans Sicat 1 0
Joseph Pineda 1 0
Rizaldy Capulong 1 0
Octavio Espiritu 1 0
Conchita Manabat 1 0
Ramon Monzon 1 0
Board of Directors
Name (Regular or Independent)
Nestor Tan Regular
Cesar Crisol Regular
Chng Lay Chew Regular
Hans Sicat Regular
Joseph Pineda Regular
Rizaldy Capulong Regular
Octavio Espiritu Independent
Conchita Manabat Independent
Ramon Monzon Independent
Principal Officers
Name Position/Designation
Nestor Tan Chairman of the Board
Cesar Crisol President and Chief Executive Officer
Elmer Serrano Corporate Secretary
Socorro Lerer Assistant Corporate Secretary
Stephanie Zulueta Finance Head/Treasurer
Effect(s)/impact on the business, financial condition and operations of the Issuer

From a corporate standpoint, maintaining the business operations of both the PSE and PDSHC while reducing operational costs through synergies can result in greater business scalability and profitability. As the two companies have highly similar and integrated functions, there should be synergies that could be realized particularly from an infrastructure standpoint, particularly on the technology side.

For the market, the single exchange setup helps achieve efficiencies, reduce risks, and facilitate the development of new products.
Other Relevant Information

The Company updated its disclosure on 16 June 2017 with Circular No. C03935-2017 to include pertinent details on the following:

1. 6 July 2017, SPA with WTSI.
2. 25 August 2017, SPA with IHAP, acting for and on behalf of some IHAP members.
3. 26 September 2017, SPA with Philam.
4. 8 November 2017, SPA with FINEX.
5. 12 January 2018, SPA with SMC.
(Please disregard Report No. C000194-2018 dated 12 January 2018).
6. 15 January 2018, SPA with TCS.
Filed on behalf by:
Name Aissa Encarnacion
Designation Corporate Information Officer