SEC probes Suntrust Home over tender offer issue

The Securities and Exchange Commission (SEC) is investigating whether Suntrust Home Developers Inc., codeveloper of upcoming integrated gaming resort Westside City Resorts World, would be required to make a tender offer to public investors.

The SEC has issued subpoenas to the Philippine Stock Exchange (PSE) to submit certain records of trades on Suntrust during the period prior

to the entry of Hong Kong-based Suncity Group Holdings Ltd. as a majority stockholder, a well-placed source from the PSE said.

Asked by the Inquirer about this matter, SEC Commission Secretary Arman Pan said the SEC, through its markets and securities regulation department (MSRD), was “aware of questions raised over the nonconduct of a mandatory tender offer for the minority shareholders of Suntrust Home Developers Inc. following the acquisition by Suncity Group of control of the listed company.”

“Among others, MSRD is checking on claims that there was no need for a tender offer because Suncity Group, through its wholly owned subsidiary Fortune Noble Ltd., supposedly acquired control of Suntrust in the open market,” Pan said.The tender offer is a mechanism intended to protect minority investors by giving them the option to exit at a fair price in case of a change in control of a company.

Under the tender offer rules, any person or group of persons acting in concert, who intends to acquire 35 percent of the outstanding voting shares or such outstanding voting shares sufficient to gain control of the board in a public company in one or more transactions within a period of 12 months, must disclose such intention and contemporaneously make a tender offer for the percentage sought to all holders of such securities within such period.

For any acquisition that will result in ownership of over 50 percent of the total outstanding equity securities of a public company, the acquirer is required to make a tender offer for all the outstanding equity securities to all remaining stockholders at a price supported by a fairness opinion provided by an independent financial advisor or equivalent third party.“The contention of Suntrust is it is not covered by tender offer because these were done through open purchases. But if two parties agree to cross shares in the open market, is that open? I don’t know,” the PSE source said.

Suncity’s entry as 51-percent investor in Suntrust in October last year baffled many trading participants as this occurred barely two weeks after the voluntary delisting of affiliate Travellers International Hotel Group Inc., developer and operator of Resorts World Manila.A disclosure showed that Suntrust would be a codeveloper of Westside City Resorts, the last integrated gaming resort to rise at Pagcor Entertainment City, after Bloomberry’s Solaire Resort and Casino, Belle Corp. and Melco’s City of Dreams Manila and Okada Manila.Some analysts noted that the fairness opinion attached to the delisting application of Travellers stated that there were no current plans to develop Westside. INQ