Retained earnings revamp in Melco Philippines tender idea
The majority shareholder in Melco Resorts and Entertainment (Philippines) Corp is proposing a “quasi-reorganisation” relating to certain retained earnings, at conclusion of the tender offer to acquire the shares that it does not already own, even though it has dropped plans to delist the entity from the Manila bourse.
The tender offer will now start on October 31: cheques to shareholders accepting the offer would be issued on December 4, according to Tuesday filings to the Philippine Stock Exchange.
Melco Resorts Philippines is the operator of the City of Dreams Manila casino complex in the Philippine capital. Melco Resorts Philippines’ existing majority shareholder, MCO Investments (Philippines) Ltd – an indirect, wholly-owned unit of casino group Melco Resorts and Entertainment Ltd – still plans to offer to buy from public investors the circa 27 percent of Melco Resorts Philippines it does not already own, by offering PHP7.25 (US$0.134) per share.
“After conclusion of the tender offer, the bidder may cause Melco Resorts Philippines and its subsidiaries” – including an entity called Melco Resorts Leisure (PHP) Corp, also known as MRLC – “to undergo a quasi-reorganisation to eliminate a deficit in the retained earnings of MRLC,” said a document with Monday’s date but filed on Tuesday.
“This process may involve applying the existing additional paid-in capital against the deficit. Melco Resorts Philippines is still exploring various options and has not yet arrived at a definite decision on how the quasi-reorganisation will be conducted,” added the firm.
How Melco Resorts Philippines could remain a listed entity, were MCO Investments’ tender offer to be wholly successful and eliminated public ownership of the firm, is unclear.
But the Tuesday document did give some background on possible resistance of some existing shareholders regarding the tender offer.
“First, certain Melco Resorts Philippines shareholders misconceived that if the bidder conducted the tender offer, Melco Resorts Philippines shareholders would be placed in a situation where they would be pressured to either accept the tender offer or face delisting of Melco Resorts Philippines in a delisting process that the bidder controlled,” said the second filing lodged on Tuesday.
It added: “To ensure that Melco Resorts Philippines shareholders do not feel any pressure from the conduct of the tender offer by the bidder, whether perceived correctly or not, the bidder proposed the change of purpose and on 19 October, Melco Resorts Philippines withdrew the delisting petitions.”
According to the filing, certain Melco Resorts Philippines shareholders also “disagreed with portions of the analysis and the [share] valuation ranges determined in the valuation report that the bidder received from FTI Consulting Philippines Inc, an independent valuation firm, as required by the Philippine Stock Exchange rules”. The company noted that shareholders can decide whether or not to tender any Melco Resorts Philippines shares at their “sole discretion”.
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