Tender offer for Melco Philippines shares deferred

THE majority shareholder of Melco Resorts and Entertainment (Philippines) Corp. (MRP) has deferred its plan to conduct a tender offer, effectively pushing back the company’s plan to delist from the Philippine Stock Exchange (PSE).

In a disclosure posted on Tuesday, MRP said MCO (Philippines) Investments Limited has informed the company that it is pushing back the tender offer originally scheduled for Oct. 3.

MCO Investments was supposed to buy back 1.57 billion common shares from the public at a price of P7.25 apiece during the tender offer period.

The company did not disclose the reason for the tender offer’s delay. BusinessWorld reached out to MRP to clarify the matter but it has yet to respond as of press time.

A number of analysts have previously complained about the low tender offer price set by MCO Investments, which they noted would be unfair to the public who invested in the company during its follow-on offering in 2013, when each share was priced at P14.

MRP however clarified in a earlier disclosure that the tender offer price was independently determined by MCO Investments through the services of FTI Consulting Philippines, Inc. Taking into account MRP’s historical and projected earnings while using market-standard methods recognized by regulators, FTI Consulting arrived at a fair value price range of P6.11 to P7.49, with the final tender offer price at the higher end of the range.

The company also explained that investors will experience “very different financial outcomes” depending on when they purchased MRP shares.

“For instance, while investors who purchased MRP shares above the tender offer price will experience a loss (if they decide to tender their MRP shares in the tender offer), investors who purchased MRP shares at the alltime low trading price of P1.15 in January 2016 or at the more recent closing price of P5.05 on July 5, 2018 will have realized a significant gain if they decide to tender their MRP shares in the tender offer process,” the company said.

It also noted that the tender offer price represents a 16.7% premium over MRP’s closing price of P6.21 each on Sept. 7, the trading session prior to its announcement of its plan to delist. Further, the tender offer price is 11.2% and 14.2% higher than the six-month volume weighted average price (VWAP) and threemonth VWAP of MRP’s shares. In September, MRP announced it will apply for the voluntary delisting of its common shares from the PSE, with the tender offer initially scheduled for Oct. 3 to 30. The company targeted to cross its shares from the PSE by Nov. 14, depending on the necessary regulatory approvals.

MRP generated a net income of P1.89 billion in the first six months of 2018, 437% higher than the same period a year ago due to improved operating results and lower interest expense. Operating revenues however slipped by one percent due to the adoption of new revenues standards.

Shares in MRP gained 0.14% or a centavo to close at P7.02 each at the stock exchange on Tuesday.