By Arra B. Francia, Senior Reporter
TRAVELLERS International Hotel Group, Inc. (TIHGI) targets to delist from the local bourse by October, after starting a tender offer for up to P8.71 billion worth of shares on Monday.
In a tender offer report filed with the stock exchange, TIHGI said the tender offer will run until Sept. 23, with cross transactions for the tendered shares scheduled for Sept. 30.
The owner and operator of Resorts World Manila looks to formally delist from the Philippine Stock Exchange (PSE) on Oct. 15.
The company targets to buy all 1.58 billion shares held by the public, or a 10.4% stake. At the least, it looks to buy 838.2 million shares, enough to bring down its public float to five percent. Under PSE rules, the minimum required ownership of the bidder after the tender offer for a voluntary delisting is 95%.
TIHGI has set the tender offer price at P5.50, which is at the higher end of the P5-5.70 range based on the fair value opinion of PricewaterhouseCoopers (PwC) and its local partner Isla Lipana & Co.
PwC/Isla Lipana said it used three methods to come up with the fair value price for the offer, namely discounted cash flow, market approach, and income approach.
“Based upon and subject to the foregoing, it is our opinion that as of the valuation date, the fair valuation of TIHGI’s share is between P5 and P5.80 using the discounted cash flow approach, which we have cross-checked with the market approach,” PwC/Isla Lipana said in its report.
“The range values where the two approaches intersect is between P5 and P5.70 or equivalent to equity values of P79,143.7 million and P90,215.3 million, respectively.”
The tender offer price is above TIHGI’s volume weighted average price (VWAP) of P5.49 for the last three months, as well as P5.46 for the last six months.
Analysts had mixed reactions on the tender offer price, but advised stockholders that it is still better to tender their shares.
“A lot of clients were hoping that the price will be closer to the IPO level since they held their shares in expectations that the price would recover,” AP Securities, Inc. Senior Research Analyst Rachelle Cruz said in a text message, referring to the company’s IPO price of P11.28 per share in 2013.
“In any case, we advise investors to tender their shares… Though hard to accept, minority shareholders will once again be left holding the bag. We hope though that the PSE and SEC will address loopholes in the rules ASAP (as soon as possible) to protect small shareholders.”
Meanwhile, Regina Capital Development Corp. Analyst Beatrice Lopez said the offer price is still relatively overpriced.
“RWM’s tender offer price is actually still relatively overpriced compared to its peer and the sector as a whole. Furthermore, there is also a minimal upside from its last closing price before the offer period began. It is only 2.3% higher than RWM’s 6-month VWAP,” Ms. Lopez said in a separate message.
TIHGI will use internally generated funds to finance the tender offer. It added that BDO Unibank, Inc. has also guaranteed a P10-billion loan from the company’s existing credit facility for the offering.