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Double whammy hits Singaporean investor in Medical City row

"It looks like the SEC is not about to allow itself to be a punching bag of rich and powerful international investors."

 

There are interesting new developments in the saga unfolding at the Medical City.

Recall that there is an ongoing shareholder intramural there. Caught in the crossfire is the Securities and Exchange Commission which was apparently snubbed and belittled by one of the protagonists – a group backed by a moneyed Singaporean investor firm.

As mentioned in my previous column on the issue, the SEC is now probing allegations that the supposed acquisition by Gonzales group of the majority stake at Medical City may not have followed the strict requirements of the country’s Securities Regulation Code.

The SEC has taken the allegations seriously. It has created a panel specifically to look into the allegations. It has urged the parties in the conflict to keep the status quo at the management of the hospital.

The regulatory body is specifically looking at a Cooperation and Shareholders Agreement and a loan agreement entered into by the parties identified with Gonzales. 

The said documents are believed to be crucial in resolving the question of the legality and legitimacy of the supposed acquisition of the majority stake by the Gonzales group. The SEC is said to have put the CSA and the loan agreement under the proverbial microscope. The fate of the takeover bid is believed to depend a lot on them.

Well, it looks like the SEC is not about to allow itself to be a punching bag of rich and powerful international investors. This appears to be the message embedded in the recent resolution issued by the regulatory agency against the said Singaporean investment giant and its partners in the acquisition of a major stake in Medical City.

Media recently reported that the SEC had charged the investment group with violating vital provisions of the country’s Securities Regulation Code. The group includes Viva Holdings, Fountel, FAI, Professional Services, Inc. and others. Based on earlier news items, the said entities are identified with Singapore-based Clermont group and with Medical City treasurer Jose Xavier Gonzales.

 In its resolution, the SEC gave the group 15 days to explain why it should not “be held liable” for violations of laws prohibiting the use of fraudulent means to acquire shares in a publicly-listed company. 

According to the SEC, the Singaporean-backed investor and its local partner Gonzales “through concealment, misrepresented their independence from each other to effectively subscribe to substantial shares” in Medical City.

The SEC made it clear that such misrepresentation and concealment prejudiced “the unsuspecting stockholders whose share value and voting power have declined” as a result of a scheme using a shareholder and loan agreement.

This is a big blow to the Singaporean-backed group which was earlier seen as blatantly ignoring an SEC status quo order, directing all parties involved in the Medical City row to stay still and not do any drastic move until it has ruled on the validity of the shares of the controversial group. 

It appears the  group did not follow the SEC order and instead proceeded with a special stockholders’ meeting to consolidate its hold on the hospital based on temporary restraining order it got from a Pasig court.

That move caught the attention of the business sector. Concerns and questions were raised regarding the muscle and will of the SEC to exercise its authority and mandate in the corporate sector. Now, the SEC appears to have made it clear that it has both the muscle and the will to do just that.

The medical community will surely await the answer of the group of Gonzales and the Singaporeans to the SEC’s charges regarding the alleged concealment and manipulative means they employed to gain control of the hospital. It would be interesting to find out why the bid to acquire a majority stake had to be hidden from the hospital board and shareholders. 

The focal point of that explanation will be the $38-million loan extended by the Singaporean group to Gonzales which the latter allegedly used to fund the purchase of shares.

Gonzales’ role in the scheme seen by the SEC as violating anti-fraud laws will also be worth watching.

Gonzales was the Medical City treasurer when that scheme was apparently put in place. It has baffled business community observers why a corporate treasurer would be part of what appears to be a grand, concealed plan to take over the very entity that has put its valuable trust on his person and role. We hope Gonzales can come up with a good explanation and lay the questions to rest.

By the way, Gonzales’ group was reportedly slapped with a temporary restraining order by the very same Pasig court from where they earlier got one to prevent the SEC from imposing its status quo order. The TRO prevented Gonzales’ group from holding the annual stockholders meeting for a Medical City subsidiary. The setback, observers say, has prevented the group from expanding their control and has insulated the subsidiaries from the conflict, at least for now.

Talk about a double whammy. This is definitely one.

Topics: Charlie V. Manalo , Singaporean investor , Medical City , Securities and Exchange Commission , SEC
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