GGRAsia – Tender offer price in fair value range: Melco Philippines

Tender offer price in fair value range: Melco Philippines

Sep 27, 2018 Newsdesk Latest News, Philippines, Top of the deck

Melco Resorts and Entertainment (Philippines) Corp says the tender offer price to buy out the firm’s minority stockholders falls within the fair value range as independently determined by a consulting firm.

The company made a clarification to the Philippine Stock Exchange on Wednesday following an article published by the Business World newspaper which quoted analysts claiming that the tender offer price was unfair because it was about half of Melco Resorts Philippines’ initial share price in 2013.

Melco Resorts Philippines made a fortnight ago a formal request to the Philippine Stock Exchange for delisting of its shares on that bourse.

MCO Philippines Investments Ltd – the controlling shareholder in Melco Resorts Philippines – plans to conduct a tender offer for just under 1.57 billion shares held by the public, at a tender offer price of PHP7.25 (US$0.13) per share.

The aggregate cost would be nearly PHP11.19 billion if fully executed.The tender offer would run from October 3 to October 30.

Melco Resorts Philippines is a unit of Asian casino developer Melco Resorts and Entertainment Ltd, and is the operator of the City of Dreams Manila casino resort (pictured) in the Philippine capital.

The parent told GGRAsia in an email on September 10, shortly after the announcement of intention to delist, that having the local unit’s shares quoted on the Manila bourse was not contributing to the group’s ability to raise funds in that market.

In Wednesday’s filing, Melco Resorts Philippines clarified that its shares were approved for public trading in 2013 through a backdoor listing. “As such, it did not conduct its own initial public offering. The PHP14 [mentioned in the newspaper article] refers to the price of the Melco Resorts Philippines shares sold through a private placement in April 2013 following such backdoor listing,” said the firm.

The company added that the tender offer price “falls within the fair value range” calculated by a firm called FTI Consulting Philippines Inc. A report prepared by FTI Consulting said the Melco Resorts Philippines’ shares had an assessed market value of between PHP6.11 and PHP7.49.

According to Melco Resorts Philippines, FTI Consulting is accredited by both the Philippine Stock Exchange and the Securities and Exchange Commission.

Melco Resorts Philippines said additionally that investors would experience very different financial outcomes “depending on when an investor purchased” shares in the company.

“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,” said the company in its latest filing.