Cemco Holdings Inc. has asked the Court of Appeals to reconsider its decision requiring the cement firm to tender an offer to buy the stakes of minority shareholders of Holcim Philippines Inc.
"Sources at Cemco are optimistic that the Court of Appeals will see the merits of the circumstances by which the transaction was made in the first instance," the firm said in a statement issued by the Sycip Salazar Hernandez and Gatmaitan Law Offices.
In August 2004, Cemco agreed with Bacnotan Consolidated Industries Inc. and Atlas Cement Corp. to acquire their combined shares in Union Cement Holdings Corp. (UCHC), a nonlisted firm and shareholder of Holcim.
In the statement, the firm said that prior to its actual purchase of the UCHC shares, BCII informed the Philippine Stock Exchange of the intended sale and the PSE formally sought confirmation from the Securities and Exchange Commission that Cemco’s intended purchase was not covered by the mandatory tender offer requirement.
According to Cemco, the SEC notified the firm last year that the commission en banc "resolved to confirm that the acquisition by Cemco Holdings of the majority shares of UCHC, a substantial stockholder of a listed company, UCC, is not covered by the mandatory tender offer requirement of the Securities Regulation Code (Rule 19)."
The Court of Appeals itself, in its questioned decision, acknowledged that Cemco proceeded to purchase the UCHC share based on the SEC en banc resolution.
But Cemco said that after it has purchased and paid for the UCHC shares, National Life Insurance, a shareholder of UCC, filed a complaint with the SEC claiming the transaction should have been covered by the mandatory offer rule. It subsequently sought to compel Cemco to make a tender offer rule to UCC shareholders.
"In a move which came as total surprise, the SEC reversed itself and pronounced that Cemco’s purchase of the UCHC shares was covered by the mandatory tender offer requirement and ordered Cemco to make the tender offer to UCC’s remaining shareholders," Cemco said.
The firm then made an appeal on the SEC’s decision with the appellate court, which subsequently rendered the unfavourable ruling.
Apparently, when the SEC issued its first ruling exempting the transaction, the regulator concluded that the purchase would not raise Cemco’s direct stake in Holcim to 35 per cent, the level that triggers the mandatory tender offer rule.
Before the purchase in late 2004, Cemco had a 17 per cent direct stake in Holcim and a nine per cent stake in UCHC, which in turn held a 60.51 per cent stake in Holcim.