PSE suspends trading of Asiabest shares

The Philippine Stock Exchange (PSE) has indefinitely suspended the trading of the shares of Asiabest Group International, as the entry of a new majority shareholder was deemed tantamount to a backdoor listing.

This means that it will need to comply with a number of regulatory requirements before a deal is finalized, according to the PSE.

In an advisory on Monday, the operator of the local bourse said PremiumLands Corp.’s subscription to 200 million common shares of Asiabest, representing the entire 66.67-percent stake of Tiger Resort Asia Ltd., would result in a change in control and “substantial change” in Asiabest’s business, thus making it a backdoor listing.

READ: Tiger Resort makes P5.24-B exit from Asiabest

As a result, the PSE indefinitely suspended the trading of Asiabest’s shares starting Monday.

Backdoor listing happens when a listed company, directly or indirectly, acquires the shares of assets of an unlisted company or person or group of persons, or vice versa. It allows an unlisted firm to become publicly listed without going through the lengthy initial public offering process.

It can also happen when there is a significant change in control, composition of the board, and business.

Shell company

Currently considered a shell company, Asiabest has not been operating since 2017, when it sold its interest in mining firm GNA Resources International Ltd. This significantly reduced its operational activities.

Based on its nine-month financial report, Asiabest currently has a deficit of P48.9 million as a result of it having no operations for seven years.

It likewise has negative operating cash flows of P8.6 million as of end-September.

In 2018, Tiger Resort took control of Asiabest and bought 200 million shares for P646 million as part of the latter’s strategy to focus on entertainment and gaming.

Meanwhile, PremiumLands is a real estate developer led by businessman Francis Lloyd Chua that has projects in Makati City and Ormoc City, according to its website.

Based on the PSE’s Revised Rules on Backdoor Listing, PremiumLands needs to conduct a public offering of at least 10 percent of its shares within one year from closing the deal.

Before the public offering, any private capital-raising activity—except a stock rights offering, employee stock option plan and stock dividend declaration—cannot be conducted unless it is to help increase the listed company’s public ownership level to the 20-percent minimum requirement.

Shares acquired through the backdoor-listing deal will be locked up for six months after the public offering.

Shares held by stockholders owning at least 10 percent will be locked up for one year from the completion of the deal.