Ongpin group sues Ashmore execs over 'simulated' share sale
MANILA, Philippines (UPDATED) – Property firm Alphaland Corporation, led by businessman Roberto "Bobby" Ongpin, has filed a criminal complaint before the Securities and Exchange Commission (SEC) against two officials of private equity fund Ashmore for allegedly "misrepresenting" a supposed deal involving the sale of the company's shares in 2012.
This is the latest development in a deepening dispute between Ongpin's group and the London-based fund whose business relationship turned sour last year.
In a statement on Wednesday, January 22, Alphaland, now controlled by Ongpin's group, announced it filed a complaint against Alexandra Autrey and Thomas Donnelly of Ashmore.
The company claimed Ashmore "simulated" the sale of 49.608 million Alphaland shares, equivalent to a 2.5% stake, to keep the property firm listed on the Philippine Stock Exchange (PSE) in December 2012. Ashmore in a disclosure signed by Autrey in January 2013 announced it sold the shares to a Singaporean company owned by investment firm Credit Suisse.
Securities regulators had ordered non-compliant publicly listed companies to raise their public ownership to 10%, the minimum percentage required, otherwise, the companies would be delisted from the bourse.
Prior to the supposed sale of Alphaland shares, the property firm had a public ownership of 8.03%. Said sale pushed up this percentage to 10.53%, allowing Alphaland to remain listed.
Ashmore still beneficial owner?
Alphaland said the sale to Credit Suisse was a simulation and Ashmore continues to own the block of shares.
"Among the basis for this claim was a written communication from Mr. Thomas Donnelly to an executive of a party interested in buying out Ashmore's entire stake in Alphaland," the company said.
This letter was attached to an earlier Alphaland disclosure to the PSE. In the letter supposedly addressed to Aurora Calderon, senior vice president of San Miguel Corporation (SMC), Donnelly stated that Ashmore was in talks to sell its 69.4% stake in Alphaland to SMC for $400 million.
Donnelly also gave the breakdown of the property firm's equity structure. He said Ashmore owned its stake through Alphaland Holdings (Singapore) Ltd. and Philippine-incorporated Masrickstar. The stake included the 2.5%, which, according to Donnelly, was "financed solely by a loan to CS from Ashmore funds and the economics stay with us."
An Inquirer report previously quoted a source in SMC who confirmed Ashmore approached the Ramon Ang-led conglomerate for a possible sale.
Alphaland said it was aware that as a result of its disclosure, it may no longer be deemed compliant with the 10% public ownership rule.
Alphaland is now 50.57% owned by Ongpin and his associates, and 24.41% owned by Ashmore. Ashmore's stake was diluted after it defaulted on a capital call made by Alphaland's board of directors, Ongpin's group announced Tuesday, January 21.
If found guilty by a Philippine court, the Ashmore officials charged may be sentenced to a prison term ranging from 7 to 21 years, said Alphaland.
End of ties
Ongpin's group and Ashmore cut their ties last year over several disagreements. (READ: Ongpin, Ashmore to part ways)
Ashmore attempted to ease Ongpin out of Alphaland because of management decisions it did not agree with. Ongpin said Ashmore was no longer willing to fund the property firm.
But Ongpin also said these disagreements were resolved, leading to negotiations for Ashmore to sell out.
Ongpin was Ashmore's local partner in the Philippines since 2006.
The businessman, who was trade minister during Marcos' time, paved the way for Ashmore's acquisition of Saudi Aramco’s 40% stake in Philippine oil refiner Petron Corporation in 2008.
Ashmore bought and kept for a few weeks the other 40% stake in Petron owned by the Philippine government, then sold this to SMC, which now controls the oil giant.
Ongpin said their breakup was part of the 7-year life cycle of equity funds. "The relationship between myself and Ashmore started in 2006 and is now nearing its 7-year life, which means that the invested funds need to be liquidated and returned to the investors in the fund," he said in a statement last year.
Ongpin's falling out with Ashmore followed other controversies involving the businessman. In 2012, Ongpin's bank accounts were ordered frozen by the Court of Appeals in relation to an alleged P660-million behest loan deal he forged with state-run Development Bank of the Philippines in 2009. – Rappler.com