The announcement last week that Philippines integrated resort operator Travellers International Hotel Group had granted rights to the casino and hotel portion of its Westside City Resorts World development to Hong Kong’s Suncity Group could result in the implementation of new rules governing companies planning to delist from the Philippine Stock Exchange (PSE).
In a complicated, multi-party deal announced early last week, Travellers and another entity called Westside City Resorts World Inc revealed they had signed a Co-Development Agreement that will lease the project site for the main hotel and casino at Westside City Resorts World – located in Manila’s Entertainment City – to Suntrust Home Developers Inc for development.
It was also revealed that Suntrust is now 51%-owned by Suncity following a series of on and off-market transactions in the preceding days.
The legality of Suncity’s acquisition of a controlling stake in Suntrust is currently under review by the PSE, however more pressing may be the details surrounding the recent decision by Travellers – which also operates Resorts World Manila – to delist from the Exchange, according to head of research for Abacus Securities Corp, Nicky Franco.
“It is very surprising that Suntrust has gotten the right to build and operate the casino because this comes less than a month after the delisting of Resorts World Manila,” Franco told the Philippine Star.
“Recall that the fairness opinion attached to the delisting application clearly states that there are no current plans to develop Westside. We questioned that claim at the time and we believe that this deal with Suncity proves our point.”
Westside City Resorts World is a sprawling, multi-billion dollar leisure and entertainment township being developed on 31-hectares by Philippines construction giant Megaworld Corporation and Travellers.
Travellers, a joint venture between Genting Hong Kong and Alliance Global Group, is one of two Manila casino operators to have delisted from the PSE since June, following in the footsteps of Melco Resorts & Entertainment (Philippines), which runs City of Dreams Manila.
However, those transactions could now see new rules implemented regarding the delisting process and how shares are valued in future when similar circumstances arise.
“Together with the PSE, we are looking at the fairness of the delisting process. The PSE has some proposals that we are evaluating,” said Ephyro Amatong, commissioner of corporate regulator, the Securities and Exchange Commission.
Francis Lim, President of the Shareholders Association of the Philippines, told the Philippine Star that more needed to be done to protect the rights of minority shareholders when a company wanted to delist.
“The PSE may want to consider amending its rules to require stockholders’ approval in addition to mere majority board approval,” he said. “It may also want to consider requiring a super majority vote both at the board and stockholders level.
“The PSE may also want to consider a minimum tender offer price, which is at the core of the issue. There are a number of models in the region that the PSE can look at and it may choose what it thinks is best for our stock market.”
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