TSI purchase fuels backdoor listing talks

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. (TSI).

The deal consisted of 43.22 million shares, which suggested a transaction per share of about P6.48, based on a disclosure to the Philippine Stock Exchange. Details were sketchy on what the new investor, Shiok Success International Ltd., intended to do with TSI, but the company’s share prices have been perked up by backdoor-listing speculation.

The disclosure indicated that Shiok was willing to undertake a tender offer to minority stockholders “if needed.” But as the deal was priced below market, however, market players said such an offer was not expected to attract minority shareholders who were seen better off holding on to their shares. TSI’s shares surged by 8.23 to close at P17.60 per share yesterday, allowing the company to breach the P1-billion mark in market capitalization.

“There’s speculation on who’s coming in and TSI doesn’t have a lot of shares, that’s why other stockholders won’t sell at a loss,” said stockbroker Joseph Roxas of Eagle Equities.

TSI has long been rumored to be a prospective backdoor-listing vehicle. Two big names have been floated in the stock market—either leading drug retailer Mercury Drug or the Camposes’ Unilab group. In a disclosure last Dec. 17, TSI denied any discussion with Mercury Drug. To date, there is no confirmation on Unilab’s rumored interest in TSI.

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

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

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

The disclosure said the “selling shareholders are of the opinion that the transaction would result in a reasonable return on 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. Doris C. Dumlao