Singapore-based firm paying P280M to take over TSI

MANILA, Philippines–An offshore unit of Singapore-based private equity group Capilion Corp. Pte. Ltd. has agreed to pay P280 million to acquire 70 percent of information technology firm Touch Solutions Inc.

The deal consists of 43.225 million shares which suggest a transaction per share price of about P6.48 per share, based on a disclosure to the Philippine Stock Exchange. But details are sketchy on what the new investor, Shiok Success International Ltd., intends to do with TSI although the company’s share prices have remained buoyant – with market prices nearly triple the deal price–on backdoor listing speculation.

Also, a disclosure indicated that Shiok was willing to undertake a tender offer to minority stockholders “if needed.” As the deal was priced below market, however, market players said such an offer is not expected to attract the remaining minority shareholders who are seen better off holding on to their shares.

In a special stockholders meeting last April 10, majority of TSI’s shareholders approved a change of primary purpose of TSI and the disposition of all or substantially all of its IT-related assets. This spin-off is seen paving the way for the infusion of new businesses, thus escalating backdoor-listing rumors.

An exit mechanism was provided to “dissenting” shareholders who may have reservations but none of them had exercised this exit mechanism, the disclosure said.

The selling shareholders comprising the bloc that agreed to sell 70 percent were: Demikk Holdings Inc., JTKC Equities Inc., JTKC Land Inc. and Tera Investments Inc. plus 11 individual stockholders, seven of which are directors.

The disclosure said the “selling shareholders are of the opinion that the transaction would result in a reasonable return of their investment in TSI.”

Two substantial minority shareholders–BDO Securities and Venture Securities which own 8 percent and 5 percent of TSI, respectively–have also kept their interest, the disclosure said.

The incoming investor, Shiok was incorporated in October 2012 under the laws of the British Virgin Islands. It is an investment holding company which is a wholly-owned unit of Capilion, a corporation organized in 2006 under the laws of Singapore. As TSI already as a foreign ownership of 11.8 percent in TSI, Shiok’s entry will bring foreign equity in the company to 81.81 percent.

The transaction is targeted to be consummated through special block sale as soon as documentary requirements and other clearance from the Securities and Exchange Commission were obtained.

TSI was incorporated in 2001 to establish and operate information technology services and products. It listed on the PSE’s second board in December 2011.