Melco Resorts and Entertainment (Philippines) Corp. (Melco Philippines) has been issued a warning by the Philippine Stock Exchange (PSE). The casino operator has been told that it needs to either float at least 10% of its stock on the exchange by June 11, or the exchange is going to move forward with a delisting of the company.
The PSE already suspended Melco Philippines trading last December when it was noted that the company was not adhering to certain rules. Most notably, it wasn’t in compliance with the rule on minimum public ownership and the PSE gave the company six months to rectify the situation. It still hasn’t taken any action, leading to the ultimatum.
Melco Philippines is a subsidiary of Lawrence Ho-run Melco Resorts and Entertainment. It operates the City of Dreams Manila and had previously announced plans for a voluntary delisting in September of last year. However, it backed down after shareholders spoke up against the move and it withdrew its petition.
MCO (Philippines) Investments Ltd. had been the company’s majority shareholder before a tender offer that ended on November 29 of last year. It held a tender offer that dropped the amount of public shares to just under 4% and, then, 2.1%. It was at this time that Melco Philippines initially violated the PSE rules, which specify a minimum of 10% in public shares, but has not taken any corrective action since.
Melco, the parent company, may not be too concerned about seeing its subsidiary delisted. It has previously said that being on the PSE has not contributed to the company’s value and it is now more interested in operations in Japan than virtually anywhere else. The company is entered in the race for one of three integrated resort licenses to be issued by the country and, according to some analysts, is in a good spot to be selected. It is also preparing to grab a huge piece of the gambling activity on the Mediterranean island of Cyprus.
Melco is listed on the NASDAQ exchange in the US and has gotten off to a strong start this year. When it released its first-quarter earnings, it reported that it had about $1.36 billion in revenue, a year-on-year increase of 3.72%. Those figures beat expectations, marking the fourth consecutive quarter the company has outperformed analysts’ predictions.