By Revin Mikhael D. Ochave, Reporter
LISTED TECHNOLOGY COMPANY Cirtek Holdings Philippines Corp. has suspended cash dividends on all its preferred shares to manage liquidity and ensure the sustainability of its operations.
The move was approved during a special meeting of the company’s board on March 7, Cirtek said in a regulatory filing on Monday.
“The board of directors of Cirtek… approved the suspension of payment of the declared cash dividends until further notice for all Cirtek’s preferred shares as part of the company’s strategy to manage liquidity and to preserve its resources to ensure long-term sustainability of its business,” it said.
Cirtek said the suspension applies to its preferred A shares, preferred B-1 shares, preferred B-2 subseries A shares, preferred B-2 subseries B shares, preferred B-2 subseries C shares, and preferred B-2 subseries D shares.
Despite this, Cirtek said it remains committed to fulfilling its obligations. “This includes payment of all dividends due on all preferred shares of the corporation and payment of all arrears of dividends outstanding by reason of the suspension, on future dates to be set by the corporation,” it said.
Cirtek declared the cash dividends for the preferred shares on Jan. 20. The cash dividends for the preferred A shares amounted to $0.000012196 per share, totaling $8,537.01, while dividends for the preferred B-1 shares were P0.06125 per share, amounting to P4.29 million.
Dividends for the preferred B-2A shares reached $0.0228125 per share, totaling $1.53 million, while the preferred B-2B shares had dividends of $0.025 per share, amounting to $500,000. Dividends for the preferred B-2C shares were P1.7678125 per share, totaling P29.94 million, while the preferred B-2D shares had dividends of P0.968825 per share, totaling P27.73 million.
Sought for comment, AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that Cirtek’s move signals the company is in “survival mode.”
He said Cirtek’s cash pile has dropped significantly over the past two years, from $44 million to $15 million, and the company has been cash flow negative in 21 out of the past 36 quarters.
“This is a sign of a company in trouble, and if the company has come to the point that it suspends dividends on preferred shares, we are not optimistic that a turnaround will happen in the near future,” he said.
DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said in a Viber message that Cirtek’s decision is “a concerning development” that suggests potential liquidity issues.
He said a closer examination of Cirtek’s financials reveals a cash balance of approximately $15.1 million as of the third quarter of 2024, which is less than half of its fiscal year 2023 cash position of $36.7 million, an alarming decline.
He added that this signals deteriorating cash flow, raising doubts about the company’s ability to meet its dividend obligations. “Given these red flags, we recommend that preferred shareholders consider liquidating their holdings, as Cirtek’s ability to sustain dividend payments appears to be compromised,” he said.
For the first nine months of 2024, Cirtek recorded a 35% decline in net income to $5 million, as revenue fell 21% to $48.5 million due to lower contributions from its business units. Cirtek is engaged in the production of semiconductor devices, antenna solutions, and other technology products.
On Monday, Cirtek shares dropped by 1.74%, or two centavos, to P1.13 apiece.
