BUSINESSMAN Gregorio Ma. Araneta III is asking the Securities and Exchange Commission (SEC) to first approve the P2-billion deal between Roberto Ongpin and Gregorio Araneta Inc. (GAI) before actually proceeding with the mandatory tender offer.
The deal involves the sale of Ongpin’s 53.76-percent shareholdings in PhilWeb Corp. to GAI.
Ongpin and Araneta agree to a special block sale of 771.651 million PhilWeb shares to GAI at P2.60 per share or P2 billion for the block. The former chairman of PhilWeb is trying to divest from the service technology provider in the hope of securing a new license from the Philippine Amusement and Gaming Corp. (Pagcor) for Pagcor’s 286 e-Games outlets.
In an October 14 letter, Araneta told SEC Chairperson Teresita Herbosa the need to conduct the special block sale first on grounds that the minority shareholders would not be willing tender their shares at P2.60 apiece considering that PhilWeb shares are trading at more than P9 each.
“I have on several occasions confirmed my willingness to abide by the requirements of the tender offer at the earliest possible time. However, it should be obvious to all concerned that because the transaction price is P2.60 per share and the current market price is above P9, that no shareholder will tender his shares at P2.60 when he can dispose of those shares at the market at anytime at the prevailing market price of P9 or better,” Araneta, the new PhilWeb chairman, said in the letter.
A tender offer is required on the part of the buyer to give minority shareholders the option to divest from the listed company when there is a change in equity structure or shareholder control.
“In view of this fact, I request that the SEC permit the block sale to be executed at the soonest time possible, i.e. prior to the tender offer requirement,” Araneta said.
“The tender offer requirement if required to be accomplished prior to the block sale, will only cause unnecessary expense on my part, e.g. fairness option, newspaper publications, etc.,” he added.
On October 11, PhilWeb under Araneta’s management has filed for an application with Pagcor to renew its omnibus intellectual property license and management agreement contract to operate Pagcor’s 286 e-Games network.
But last week, SEC’s Herbosa said the commission must study PhilWeb’s request as this was the first time that a buyer sought to conduct the share sale first before making a tender offer.
“I’m trying to think if there’s a particular situation like this. If there’s precedent to this, it’s okay. But it is the first time, so it might take some time for us to study it,” Herbosa said.
In August, Ongpin resigned as PhilWeb chairman after President Rodrigo Duterte tagged the businessman as an oligarch that needs to be destroyed. PhilWeb’s agreement with Pagcor expired on August 10.
The share purchase deal between Ongpin and GAI in place will be done in two phases, the first of which covers 653.151 million shares in a special block sale and is subject to SEC approval. The second tranche of 118.5 million shares is required to be listed on the PSE.
Ongpin has said in one of his letters to Pagcor that P1 billion from the proceeds of his shares would be given to the government’s drug rehabilitation program.
As the e-Games operator, PhilWeb directly employs 700 personnel and 5,000 others under contract operators of the online gaming outlets. As a service provider for the e-Games outlets over the last 14 years, PhilWeb has remitted over P14 billion to Pagcor, which the gaming regulator used for its pro-poor programs.
In 2015, PhilWeb remitted more than P2.1 billion to the regulator and paid over P280 million in corporate income tax, value-added tax and other taxes.