City of Dreams operator achieves plan to delist, albeit involuntarily

The operator of City of Dreams Manila will cease to become a publicly traded company on Tuesday in line with an earlier-announced intention to exit the Philippine Stock Exchange (PSE).

Melco Resorts and Entertainment (Philippines) Corp. will automatically be delisted from the PSE on June 11 after failing to meet the 10-percent minimum public ownership requirement of the bourse for over six months.

The company has a free float of just 2 percent from 27 percent last year after its controlling shareholder offered to buy out existing stockholders at a premium. That offer was concluded last Nov. 29.

Falling below the minimum public ownership requirement of the PSE exposes a public company to delisting, which has been Melco Resorts Philippines’ goal since last year.

Parent firm Melco International Development Ltd. explained in a Hong Kong Stock Exchange filing last year that being listed has not benefited Melco Resorts Philippines in terms of fundraising. It also complained of “considerable efforts and expenses being incurred to maintain its listed status.”

The company initially sought to exit the PSE under a voluntary delisting but minority shareholders balked at the offer price. The circumstances by which it is now exiting is called involuntary delisting, which has stricter penalties.

Under the PSE’s rules, companies that are involuntarily delisted are barred from again becoming a public company for five years. Moreover, directors and executive officers of the company are disqualified from handling those positions in any company applying for public listing within that five-year period.

Melco Resorts Philippines took the backdoor listing route when it took over Manchester International Holdings in 2012.

Melco Resorts earlier disclosed that year-on-year net income in the first quarter of 2019 fell 46 percent to P286.77 million as revenue growth failed to keep up with rising costs.

Total operating revenues during the period rose 2 percent to P7.51 billion, the bulk of which came from casino revenues, which rose 3 percent to almost P6 billion. Total operating expenses rose 6 percent to P6.67 billion. —MIGUEL R. CAMUS