MCO Investments Limited, the controlling shareholder of Melco Resorts and Entertainment (Philippines) Corporation (MRP), is moving forward with a tender offer. There have been concerns 
surrounding its share price offer, as well as whether or not the company would be able to receive the required 95% minimum of outstanding stock for it to be delisted from the Philippine Stock Exchange (PSE).
MRP said in a filing with the exchange last Friday that shareholders need to decide what is a fair price for the shares under the tender offer and adjust their shares accordingly. MRP had initially said that the price would be 7.25PHP (US$0.13); however, a backlash over the price led the company to delay the tender offer for two weeks.
The company asserted in last Friday’s filing, “Any further unnecessary delay or disruption to the tender offer will essentially deprive the MRP shareholders of their entitlements and rights as shareholders of MRP to consider and participate in the tender offer.”
The 7.25PHP price point is said to be too low, as it is only about half of what the initial share price was in 2013. Investors have attempted to compare MRP to other publicly listed companies in Manila, such as Travellers International Hotel Group and Bloomberry Resorts.
According to MRP, “One of the two companies, Travellers, experienced a tragedy last year and its operating performance has not yet recovered. MCO believes that it trades at an artificially high multiple today as its current value is primarily driven by its soon to be open next phase and significant and very valuable land bank. As such, its multiple has limited comparative value.
“On the other hand, MCO believes that Bloomberry Resorts Corp … is comparable to MRP. Even then, there are significant differences between Bloomberry and MRP. Bloomberry and MRP operate properties located literally down the street from each other on Aseana Ave. Both benefit from having mature operations and being viewed by investors as good operators in the market. However, Bloomberry has historically commanded a premium in its EV/EBITDA multiple valuation to MRP. MRP management has tried to market MRP to investors to reduce that gap but has largely been unsuccessful.
“MCO believes that the views expressed by investors as demonstrated in the relative trading between Bloomberry and MRP are relevant.”
Melco is pushing the tender offer in an effort to be delisted from the PSE; however, it says it will proceed with the request even if it doesn’t reach the 95% requirement.
