SM Group is also into legalized gambling

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EMETERIO SD. PEREZ

EMETERIO SD. PEREZ

BUSINESSMAN Henry Sy Sr. may not be aware that he and his family have long been engaged in gaming. Like businessman Roberto V. Ongpin, he owns companies, which are either the majority stockholders or simply classified as principal or significant stockholders of gaming entities.

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Because winning is based on chance, gaming companies could be classified as gambling. The only difference between them and “jueteng” is that gaming is legalized gambling.

This is the story how the SM group of the Sys is indirectly into gambling, which the government defines as gaming.

The SM group’s units may not be the direct stockholders of listed gaming companies but it still is an active participant in their ownership even if only as indirect stockholder. Thick layers of ownerships separate it from its indirectly owned unit. So the public have to go through them to identify who owns what of which listed stocks that earn revenues from gaming.

SMIC owners
SM Investments Corp. (SMIC) is the listed holding company of the Sy family. It has authorized capital of 1.2 billion shares divided into 1.19 billion common shares and 10 million preferred shares of which 803.055 million are outstanding common shares.

In a definitive information statement, SMIC listed Sy Sr. and six other members of his family as holders of 355.91 million common shares, or 44.32 percent. Despite their minority ownership, the family controls the company’s eight-person board led by the family patriarch. They may be among the client of PCD Nominee Corp. that has the “power to decide how their shares are to be voted.”

As of Jan. 31, PCD Nominee held for Filipinos and foreigners, 78.971 million SMIC common shares, or 9.83 percent, and 268.056 million SMIC common shares, or 33.38 percent, respectively.

BDO Unibank
With its direct ownership of 1.464 billion common shares, or 40.13 percent, SMIC is the single biggest stockholder of BDO Unibank Inc. The Sy-owned corporate stockholders including SMIC, own 1.982 billion BDO shares, or 54.34 percent, according to a public ownership report (POR) as of July 14.

The five other principal/substantial stockholders of BDO Unibank are Multi-Realty Development Corp., 263.477 million shares, or 6.48 percent; Sybase Equity Investments Corp., 201.509 million shares, or 5.53 percent; Shoemart Inc., 75.254 million shares, or 2.06 percent; and Sysmart Inc., 5.171 million shares, or 0.14 percent.

With 1.998 billion BDO shares, or 54.768 percent, classified in the bank’s POR as non-public, 1.65 billion shares, or 45.232 percent, are deemed public, or held by investors outside the Sy family.

Property unit
SM Prime Holdings Inc. also belongs to the SM Group. Its POR listed SMIC as owner of 14.353 billion shares, or 49.702 percent.

As a unit SM Group, SM Prime listed 10 principal stockholders, including SMIC, as holders of 16.36 billion shares, or 56.649 percent. Including other insiders, SM Prime said its non-public shares totaled 19.798 billion shares, or 68.555 percent, leaving the public with 9.081 billion shares, or 31.445 percent.

SM Prime listed SMIC only as one of its stockholders with 735.554 million shares, or 7.006 percent. It has four other SM-owned corporate stockholders who, together with SMIC, control 5.501 billion shares, or 52.399 percent. Its three affiliates hold 252.378 million SM Prime shares, or 2.404 percent.

With the SM group including individual insiders owning 5.94 billion SM Prime shares, or 56.582 percent, the public holds the remaining 4.558 billion SM Prime shares, or 43.417 percent.

Gaming or gambling?
Like Philweb Corp. of which Ongpin is the majority stockholder, the SM Group, which is controlled by the Sy family, is also engaged in gaming thru Belle Corp. The website of the Philippine Stock Exchange tells the story how the family got into gaming:

“On April 14, 2011, BEL acquired Premium Leisure & Amusement, Inc. (PLAI) which has a license from the Philippine Amusement and Gaming Corporation (PAGCOR) to operate integrated resorts, including casinos, in the vicinity of the Bagong Nayong Pilipino, Manila Bay Entertainment City (Entertainment City) and the Newport City Integrated Resort.

“ . . . . In May 2015, City of Dreams Manila became the first integrated resort in Entertainment City to have its license converted from Provisional to Regular status by PAGCOR.”

Incidentally, four Sy-owned companies were reported in a POR as of July 2016 as Belle’s principal stockholders owning 5.501 billion shares, or 52.399 percent. They were—and still are—Belleshares Holdings Inc., 2.605 billion shares, or 24.81 percent; Sysmart Corp., 1.629 billion shares, or 15.52 percent; SM Investment Development Corp., 695.069 million shares, or 6.62 percent; and Sybase Equity Investments Corp., 531.321 million shares, or 5.061 percent.

Pagcor franchisee
Belle is the majority stockholder of Premium Leisure Corp. (PLC) with 24.905 billion PLC shares, or 78.74 percent. PLC, in turn, “wholly owns 100 percent equity investment in Premium Leisure and Amusement Inc. (PLAI).”

The PSE website described PLAI as a holder of “Certificate of Affiliations and Provisional License to operate integrated resorts, including casinos, in the vicinity of PAGCOR Entertainment City. The license runs concurrent with PAGCOR’s Congressional Franchise, which expires in 2033, renewable for another 25 years, by the Philippine Congress.”

PLAI, according to PSE website “also owns 50.1 percent controlling interest in Pacific Online Systems Corp. (LOTO), which leases online betting equipment to the Philippine Charity Sweepstakes Office (PCSO) for their lottery operations in the Visayas and Mindanao regions.”

Pacific Online, which uses LOTO for market symbol, may be only a PLC affiliate, which, however, is its largest stockholder with 149.52 million LOTO shares, or 50.1 percent.

In business, there is no distinction between gaming and legalized gambling when it brings in profits and creates employment

esdperez@gmail.com

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