Bengzon asks SEC to block nephew’s Medical City takeover bid

The chief of The Medical City, one of the Philippines’ largest and most established healthcare institutions, wants the country’s corporate watchdog to nullify the voting power of the hospital’s majority owners who allegedly acquired their stakes illegally.

In an interview with the Inquirer, Dr. Alfredo Bengzon said a group of shareholders represented by his own nephew, Jose Xavier “Eckie” Gonzales, had so far accumulated a combined 54-percent stake in the Ortigas-based hospital, but had done so in violation of the requirements of the securities laws.

In particular, Bengzon said Gonzales and the Singapore-based Clermont Group acquired shares of the hospital from other stockholders without disclosing that they were acting in concert, and thus avoiding corporate regulations that would have compelled them to make a “tender offer” to buy out other owners —a requirement imposed on publicly listed corporations.

The Supreme Court ruled firms were considered “public” companies if they have assets in excess of P50 million and have 200 or more holders, at least 200 of which hold at least 100 shares of a class of equity securities.

“No one knew they were acting together on this,” he said, denying statements made by Gonzales’ allies that the hospital chief was aware of the share acquisition plan since 2013 when his nephew brought in the new shareholders to help buttress the firm’s finances. “I’ve had eight meetings with Eckie over this since last year to ask him about it, and he’s always denied it.”

The dispute came to a head in May, Bengzon said, when Gonzales and Clermont expressed their joint opposition to the proposed buy-in of the Ayala group—involving P2 billion in fresh capital—for a minority stake in The Medical City.

“Ayala wanted to pay up two times book value for the shares,” Bengzon said, explaining that Gonzales’ proposal for their camp’s own capital infusion significantly undervalued the half-a-century-old hospital

For allegedly keeping creeping accumulation of shares from other owners, the Medical City chief wants the Securities and Exchange Commission to void the voting rights of Gonzales and Clermont, which he believes the group intends to use to take control of the firm once it holds a general stockholders’ meeting.

Bengzon said his group currently controls the hospital’s 15-person board with nine allies, while Gonzales’ side has five backers. One member is undecided.

He said Ayala remained interested in acquiring a stake in the hospital but wanted the internal dispute settled first.

“Ayala’s values are in lock step with ours. We see eye to eye on how a healthcare institution should be run,” he said. “[Gonzales and Clermont] are portfolio guys. They’re finance guys. It’s about money for them.”