Melco postpones tender offer for Philippine casino once again

Melco Resorts and Entertainment operates casinos in the world’s biggest gambling hub of Macau under billionaire Lawrence Ho. It is currently building a resort in Cyprus and shifting focus to Japan where it hopes to win a casino license in the coming year.

However, the company said in a disclosure that the purpose of the offer - scheduled for Monday after being first postponed on Oct. 1 - will be to increase its majority owner’s shareholding, rather than delist.

It aimed to use the Philippine delisting to simplify its corporate structure, said Evan Winkler, president and managing director at Melco International Development, in an interview with Reuters earlier this month.

“What is happening is effective corporate clean up that would allow for greater efficiency within the group,” Winkler said. “We feel we are putting forward a full and fair value to minority shareholders.”

Melco operates one of three integrated casino-resorts in Manila’s smaller version of the Las Vegas gambling strip. It planned to buy back shares at 7.25 pesos apiece and then delist in a transaction worth as much as 11.38 billion pesos ($211.5 million).

But minority shareholders complained to the bourse that the price was “unfair” and “undervalued” the firm compared with the 14 peso price of shares Melco sold to the public five years ago.

Under Philippine rules, Melco must obtain 95 percent of shares to pursue delisting.

Raymond Ricafort, writing to the Philippine Stock Exchange (PSE) on behalf of a group shareholders holding around 1 percent of Melco Philippines, opposed the fairness of the valuation.

“I think the PSE and its board should at least investigate before they allow this tender offer and delisting to proceed.”

FTI Consulting Philippines said the valuation, which it approved, was independently determined by Melco and the company had only rendered an opinion on whether it was fair or not.

Roel Refran, PSE chief operating officer, told Reuters the bourse had received several letters from investors concerned about the price, and that it had instructed Melco to address the issues to protect the investing public.

Melco then, on Oct. 1, said it would delay its offer by two weeks and published documents to assuage investor concerns.

A Hong Kong-based investor said, while he felt the price was too low, he feared others would have to accept rather than risk owning an illiquid minority stake in a private company.

Separately on Thursday, Melco listed its Macau casino Studio City International Holdings Ltd in New York, adding to the complexity of the company’s corporate structure. ($1 = 53.7900 Philippine pesos).