MANILA, Philippines – Listed holding firm Millennium Global Holdings Incorporated is no longer buying an 81% stake in Calata Corporation, after the local bourse expressed doubt over the embattled agribusiness firm’s plan to spin off its assets and avoid the involuntary delisting route.
This is the latest development in Calata’s delisting saga, which was a result of its multiple violations of the disclosure rules set by the Philippine Stock Exchange (PSE).
To save the firm from being involuntarily delisted from the PSE, Calata had decided to spin off its assets and sell an 81% stake to Millennium Global.
Ending “with a firm handshake,” Millennium Global on Tuesday, October 24, disclosed its decision to cancel its plan to acquire a majority stake in Calata.
“The company shall instead tap its other business opportunities and areas of growth to fortify its business within the country and abroad,” Millennium Global corporate secretary Lyra Gracia Fabella told the local bourse, without divulging the exact reason for the collapsed acquisition talks.
The decision of Millennium Global’s board of directors to no longer buy into Calata comes after PSE president and chief executive officer Ramon Monzon said Calata’s plan to be the vehicle for a backdoor listing as subsidiary of the holding firm is “not workable” as it involves “so many uncertain things.”
According to Monzon, Calata’s proposal would need the approval of the Securities and Exchange Commission (SEC) on the proposed increase in authorized capital stock to facilitate the entry of Millennium Global.
The agribusiness company would also need the approval of its shareholders for the proposed sale of an 81% stake to Millennium Global, Monzon had said.
To give it a chance, the PSE then proposed that Calata delist voluntarily on the condition that it must conduct a tender offer to small shareholders.
Biggest PSE penalty
Following the PSE proposal, the listed agribusiness firm of self-made businessman Joseph Calata stood its ground by telling shareholders that selling out to Millennium Global remains the best solution to save Calata.
Calata said it has only “around P400 million in retained earnings as of end-2016,” which is below the P1 billion needed to conduct a tender offer to small shareholders.
An involuntary delisting is among the biggest penalties imposed by the PSE. Firms that are involuntarily delisted from the PSE – like what happened to Alphaland Corporation – are not allowed to relist within 5 years of being delisted.
Under this “blackout rule,” officers or directors of involuntarily delisted companies are also disqualified from becoming officers or directors of any company applying for listing with the PSE.
The PSE last July 22 initiated a delisting procedure against Calata for committing 29 violations of Section 13.1 of the disclosure rules from November 29, 2016 to June 20, 2017.
Section 13.1 provides that a listed firm should file within a 5-year period any direct and indirect ownership change of its directors and principal officers.
Calata also committed 26 violations of Section 13.2, which prohibits directors or principal shareholders of a listed firm from trading the company’s stock when material non-public information is obtained and up to two full trading days after the price-sensitive information is disclosed.
Trading of Calata stock has been suspended since June 30.
Back in 2012, Calata faced a complaint before the Department of Justice after 13 of its employees allegedly manipulated the share price of the listed agribusiness firm, according to the SEC.
In 2016, Calata tried to diversify into gaming by partnering with a US-based investment group and a Macau-based gaming operator to create a real estate and investment trust (REIT) for a P65-billion, 14-hectare casino resort on Mactan Island, Cebu. Talks, however, also collapsed. – Rappler.com