PSE proposes new stock valuation rules.
By James A. Loyola
The Philippine Stock Exchange Inc. is coming out with new rules on the valuation of stocks subject of tender offers or other modes of acquisition after complaints from minority shareholders prompted the bourse to review its existing rules.
In an interview, PSE President Ramon S. Monzon said the draft rules will authorize the bourse to be the one to choose a valuation company for all those deals that needed a fairness opinion provider instead of the parties involved.
"In the proposed rule, for any deal that requires valuation from a third party company, the PSE will ask the firm to pick at least three firms acceptable to them and the exchange will pick from any of these," he explained.
Monzon added that, "we will choose from these and we will engage them, and then they will report to us. So there will be no bias."
He said the PSE is now seeking comments from the public for the draft rules before it is finalized and submitted to the Securities and Exchange Commission for approval.
The move to come out with stock valuation rules was prompted by complaints from minority shareholders of Melco Resorts and Entertainment (Philippines) Corporation whose parent company made a tender offer for minority shares with the aim of having the stock delisted.
The firm offered P7.25 per share for all those shares being held by the public. However, shareholders complained that the tender offer price was too low and far below its listing price of P14 per share even though Melco hired a third party valuation firm.
Most shareholders eventually agreed to tender their shares despite complaining about the price since they didn't want to end up with shares of a delisted stock.
While Melco backtracked and said it will no longer seek to delist its shares, stock analysts noted that its shares will be delisted anyway since its public float would fall below the required 10 percent after the tender offer.
With a forced delisting instead of a voluntary delisting in the horizon, most minority shareholders eventually tendered their shares at Melco's offered price.
"Melco is, for all practical purposes, is already delisted because they only have 2 percent out in the market. Of course our rules say we give them six months to try to correct this--but we know that they wouldn't want that--so, for all practical intents and purposes they are de facto delisted," said Monzon.
PSE President and CEO Ramon S. Monzon