The Philippine Stock Exchange thumbed down the proposal of listed agriculture company Calata Corp. to sell out to Millennium Global Holdings Inc., a listed firm formerly known as IPVG Corp.
Calata in August signed a deal to sell an 81-percent stake in the company to Millennium Global and spin off its assets to privately held Agriphil Corp. in a bid to save the agriculture firm from being delisted from the stock exchange and protect minority shareholders.
The PSE initiated involuntary delisting procedure against Calata because of the latter’s alleged multiple disclosure violations. Calata president Joseph Calata earlier said the company, as a neophyte member of PSE, struggled to comply with all the rigorous regulatory requirements.
PSE president Ramon Monzon said in an interview at the sidelines of a forum conducted by the Shareholders Association of the Philippines that Calata’s proposal was not workable.
Monzon said the Calata deal would involve many uncertain things, including getting the approval from the Securities and Exchange Commission on the proposed increase in authorized capital stock to facilitate the entry of Millennium Global.
He said Calata would also need to secure shareholders’ approval for the planned spinoff of its assets and the sale of the majority stake in Millennium Global.
Millennium Global said it planned to use Calata to acquire the business of its subsidiary Millennium Ocean Star Corp., which is a leading exporter and importer of seafood and aquaculture products in the local and international market.
“To be able to do that, Calata would need 67 percent vote and right now these small shareholders of Calata own 72-percent stake in the company. Would the small shareholders agree to that move wherein their 72-percent stake will only be equivalent to 8 percent stake in Millennium Global? It is not practical. We told them this is not workable,” Monzon said.
Monzon said instead of selling out to Millennium Global, Calata was given an opportunity to conduct voluntary delisting. PSE earlier initiated involuntary delisting on the condition that Calata would conduct a tender offer to small shareholders.
“The message we gave them is if you [Calata Corp.] really are concerned for small shareholders, PSE is going to bend its rules and make it a voluntary tender offer, so they could conduct a tender offer. If they make a tender offer, then PSE will allow them to conduct voluntary delisting,” Monzon said.
Companies that are involuntary delisted from the PSE face stiffer penalties as they are not allowed to re-list from the local bourse within five years from being delisted. At the same time, the officers or directors of involuntary delisted firms are disqualified from becoming directors or executive officers of any company applying for listing with the PSE.
Meanwhile, companies that voluntarily delist from the PSE may come back and apply for re-listing with PSE anytime.
MGHI, led by chairman, president and chief executive Yang Chi Jen (Michael Yang), recently diversified into the food sector with the acquisition of Millennium Ocean Star Corp. and Cebu Canning Corp.
MGHI said in August its board approved the increase in the authorized capital stock of the company from P250 million to P10 billion and the acquisition of 81 percent of Calata by subscribing 2.5 billion shares from Calata’s increase in authorized capital stock.