The controlling shareholder of Melco Resorts and Entertainment (Philippines) Corporation (MRP), MCO (Philippines) Investments Limited, has vowed to push through with a tender offer for shares of MRP despite concerns over its Php7.25 share price offer and whether the company can obtain at least 95% of outstanding stock as required for its ultimate goal of delisting from the Philippine Stock Exchange (PSE).
In a filing to the PSE on Friday, Melco – which had earlier in the week delayed commencement of the tender offer for two weeks from 1 October to address the issues raised – said it was up to shareholders themselves to express their views on what constitutes a “fair price” under the tender offer and tender their MRP shares accordingly.
But it warned, “Any further unnecessary delay or disruption to the tender offer will essentially deprive the MRP shareholders of their entitlements and rights as shareholders of MRP to consider and participate in the tender offer.”
Melco also rejected comparisons to the share price of other gaming operators in Manila, including fellow publicly listed firms Travellers International Hotel Group, which operates Resorts World Manila, and Bloomberry Resorts, which owns Solaire Resort & Casino.
Melco had issued a previous defense of its Php7.25 per share offer price following an inquiry from the PSE regarding an article published in Business World which claimed that Melco’s offer was unfair because it was only around half of its initial share price in 2013.
Launching its latest defense, Melco said, “One of the two companies, Travellers, experienced a tragedy last year and its operating performance has not yet recovered. MCO believes that it trades at an artificially high multiple today as its current value is primarily driven by its soon to be open next phase and significant and very valuable land bank. As such, its multiple has limited comparative value.
“On the other hand, MCO believes that Bloomberry Resorts Corp … is comparable to MRP. Even then, there are significant differences between Bloomberry and MRP. Bloomberry and MRP operate properties located literally down the street from each other on Aseana Ave. Both benefit from having mature operations and being viewed by investors as good operators in the market. However, Bloomberry has historically commanded a premium in its EV/EBITDA multiple valuation to MRP. MRP management has tried to market MRP to investors to reduce that gap but has largely been unsuccessful.
“MCO believes that the views expressed by investors as demonstrated in the relative trading between Bloomberry and MRP are relevant.”
Melco added that the primary purpose of its tender offer is to delist from the PSE and that although PSE rules require it to obtain at least 95% of outstanding stock for delisting to be considered, if it fails to do so “MRP will nonetheless proceed with the request for voluntary delisting.”
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