Melco Resorts and Entertainment (Philippines) Corp (MRP) has denied a report suggesting its impending delisting from the Philippine Stock Exchange (PSE) is unfair to shareholders.
The company this week responded to an inquiry from the PSE regarding an article published in Business World which claimed that Melco’s offer of Php7.25 per share was unfair because it was only around half of its initial share price in 2013.
It follows MRP’s announcement earlier this month that it had requested to be delisted from the PSE and had been informed by its controlling shareholder, MCO (Philippines) Investments Limited, of the latter’s intention to conduct a public tender offer for up to 1.57 billion publically-owned and other MRP common shares at the Php7.25 offer price. MCO (Philippines) Investments Limited is the controlling shareholder of MRP with its 3.95 billion shares representing a 72.77% stake in the company.
The Business Review article quoted a trader at Timson Securities, Inc, Jervin S. De Celis, who stated, “That’s an unfair price now that MRP is starting to earn money … the shareholders, who bought higher or held on to the IPO price, are the losers here.”
It also quoted an equities trader at Diversified Securities, Inc., Aniceto K. Pangan, as stating, “It’s unfair for those investors who were offered a higher price during their IPO and follow on offering. Considering they stayed on and saw more of a long term investment from the company, then they are the ones who will lose money here.”
In response, MRP stated this week that because it listed on the PSE through a backdoor listing in 2013, it never conducted an IPO and that the referred price of Php14 per share was through a private placement in April 2013.
It added that the Php14 price was determined “based largely on market demand for the investment resulting from a marketing process conducted by international investment banks. Specifically, it was the result of a book building process and discussions among the Company, MCE (Philippines) Investment Limited (the selling shareholder) and the Joint Lead Managers of the offering.”
Melco also noted that, while those investors who purchased shares above Php7.25 will inevitably incur a loss, “investors who purchased MRP shares at the all-time low trading price of Php1.15 in January 2016 or at the more recent closing price of Php 5.05 on 5 July 2018 will have realized a significant gain if they decide to tender their MRP shares in the tender offer process.
“More importantly, the fact that the tender offer price may be lower than an investor’s acquisition cost does not, in and of itself, make the tender offer price unfair. FTI Consulting determined such price taking into account various objective factors, including MRP’s historical and projected earnings, and using market-standard methods recognized by the regulators.
“FTI Consulting arrived at a fair value range for MRP shares at Php6.11 to Php7.49, and the tender offer price of Php7.25 comes in at the higher end of the fair value range.”
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