AFP

By Arra B. Francia, Reporter
SHAREHOLDERS of Melco Resorts and Entertainment (Philippines) Corp. (MRP) stand to lose from the company’s proposed exit from the Philippine Stock Exchange (PSE), as analysts claim that its low tender offer price — just around half its initial share sale price in 2013 — is unfair.
The operator of the City of Dreams Manila is set to conduct a tender offer to buy out minority stockholders in accordance with its voluntary delisting plan. The gaming firm has set a tender offer price of P7.25 each, much lower than its price of P14 apiece when the company conducted an initial public offering (IPO) back in 2013.
“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,” said Jervin S. De Celis, a trader at Timson Securities, Inc., in a mobile message.
Aniceto K. Pangan, equities trader at Diversified Securities, Inc., echoed this view, saying the pricing will be against the stockholders who planned their investments for the long term.
“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,” he said in a phone interview.
MRP engaged FTI Consulting Philippines, Inc. to conduct a fairness opinion for the tender offer price, which reported a fair market price range of P6.11 to P7.49 per share. The final offer price indicates a premium of around 14% to the shares’ three-month volume weighted average of P6.35 as of Sept. 7.
The stock’s closing price was P6.21 on Sept. 7, or the trading session before the company announced its delisting plan.
The shares to be tendered are currently owned by MCO (Philippines) Investments Ltd. (MCO Investments), which seeks to acquire up to 1.54 billion common shares in MRP at P7.25 apiece, or a total of P11.18 billion.
MCO Investments must acquire at least 95% of MRP’s outstanding capital stock for the PSE to entertain its petition for voluntary delisting, as per PSE rules.
“The shareholders have to talk to the Board to really know the fair price but what makes the tender offer unfair is that their follow on offer price was at P14 five years ago and MRP was not even earning that time. Now that they’re starting to earn, they’re buying back the shares at almost half the price below the IPO price,” Mr. De Celis said.
Philstocks Financial, Inc. Research Associate Piper Chaucer Tan noted that more than the unfair price, investors are worried that their stock will be illiquid once the company delists from the PSE.
“If they don’t exercise the tender offer, first it will be illiquid since it has been delisted in the exchange and you will go directly to the stock transfer office in order to sell it,” Mr. Tan said via text.
He added that once MRP is delisted, stockholders will no longer have an indicative price to base on how much they will sell the shares.
“When the tender offer was made it has a indicative price. If you don’t exercise, you don’t have a reference price and MRP will determine the price per share of your stock position or even they can value it below the tender offer price which is at P7.25,” Mr. Tan explained.
MRP said that should it fail to comply with the 95% requirement for the tender offer, it will still proceed with its petition for delisting.
MRP’s tender offer is scheduled to run from Oct. 3 to 30, with the acceptance of shares tendered to be completed by Nov. 7. The company then targets to cross its shares from the exchange by Nov. 14, as per PSE approval.

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