PSE: Lopez Holdings covered by stricter delisting rules

The Philippine Stock Exchange (PSE) will subject Lopez Holdings Corp. (LPZ) to the tigh­ter rules on voluntary delisting that were recently approved by the Securities and Exchange Commission (SEC).

This means LPZ’s proposed delisting must be approved by at least two-thirds of the entire membership of the corporate issuer’s board, including the majority, but not less than two of all of its independent directors.

Furthermore, the number of votes cast against the delisting proposal should not be more than 10 percent of the total outstanding and listed shares of the listed company.

“While they applied for delisting before SEC approval of our revised delisting rules, we informed them that our delisting rules then were in a state of flux—awaiting approval by SEC of the revised delisting rules—so they could not insist on being covered by the then existing rules,” a top source from the PSE told the Inquirer.

The PSE’s tighter rules on voluntary delisting took effect on Dec. 21. First Philippine Holdings (FPH) first announced its intention to buy out publicly held shares of LPZ at a price of P3.85 per share on Dec. 1. The tender offer, a prelude to the delisting of LPZ, was intended to run from Jan. 22 to Feb. 19 this year.

LPZ acknowledged the conduct by FPH of a tender offer to acquire a minimum of 20 percent and a maximum of 45.56 percent of the total issued and outstan­ding common shares of LPZ from all the shareholders, excluding the shares owned by its ultimate parent entity, Lopez Inc.

The board of directors of LPZ then approved the engagement of KPMG as independent financial adviser to provide a fair tender offer price.

The PSE overhauled its voluntary delisting rules to address complaints on the unfair pricing of many of the companies that have delisted or are planning to delist from the local bourse.

In the case of LPZ, there were concerns raised on the valuation especially as LPZ had an effective 34.6-percent interest in renewable energy crown jewel First Gen Corp., which has a current market capitalization of P116 billion. This suggested First Gen was worth around P40 billion to the holding firm.

With LPZ’s 4.54 billion shares outstanding, this is equivalent to close to P9 per share or much more than the delisting tender offer price of P3.75 per price.

But based on a Dec. 12 fairness opinion issued by KPMG R.G. Manabat & Co., the fair value of the listed common shares of LPZ ranged between P2.34 and P3.92 each as of the cutoff date at end-September 2020. KPMG thus deemed the tender offer price “fair and reasonable” from a financial point of view.

In taking its publicly listed main holding firm back to private hands, the Lopez group said it was to consolidate ownership and simplify corporate structure. Apart from FPH, the holding firm is also the controlling stockholder of beleaguered broadcasting firm ABS-CBN Corp.