Publicly-listed cement firm Holcim Philippines Inc. said that the decision of the Securities and Exchange Commission to reverse its policy on tender offers sends a wrong signal to investors. In a press briefing yesterday, Holcim Philippines chief operating officer Paul M. O’Callaghan said the order for Cemco Holdings Corp. to conduct a tender offer for minority shareholders of Holcim Philippines casts doubts on the investment climate in the country. The SEC order, which was released last week, required Cemco to make a tender offer since it now controls the publicly listed company through its acquisition of a 51% stake in Union Cement Holdings Corp. Union Cement Holdings owns 60% of Holcim Philippines. The law that mandates the tender offer does not make distinctions between direct and indirect acquisitions, the SEC reasoned.
Under the Securities Regulation Code, companies acquiring 15% of a publicly listed company must offer to buy the shares of minority shareholders. The tender offer trigger has been raised to 35% under the implementing rules and regulations for the SRC. The SEC decision reversed an earlier policy of the commission, which stated that the tender offer rule does not cover indirect acquisitions.
"The reversal raises questions for the investment climate... investors will now be very careful, even when they get a ruling [from a regulator]," Mr. O’Callaghan said. The Holcim Philippines President said Cemco only pushed through with its acquisition of the 51% stake in Union Cement Holdings last year after it was assured by the Philippine Stock Exchange and the SEC that it did not need to conduct a tender offer to minority shareholders of Holcim Philippines. He also noted that the purchase of the Cemco shares was transparent. "Everything was done in good faith and with the clearance of the SEC," he said.
Mr. O’Callaghan said the commission should have ruled that Cemco would have to conduct a tender offer for the purchase of the 51% stake in Union Cement Holdings at the time that it asked the opinion of the commission. "They should have said so the first time," he said. Jocelyn Perez, Holcim Philippines senior vice president, said that had the SEC ruled immediately to require Cemco to conduct a tender offer for the Union Cement Holdings shares, the buyer would have taken the policy into consideration at the time the purchase was made.