The Securities and Exchange Commission expressed concern over the Philippine Stock Exchange’s proposal to amend the guidelines for fairness opinions and valuation reports.
Under the PSE proposed amendments, the exchange will select and engage the valuation provider from three accredited valuation providers selected by the company that is conducting the tender offer.
This aims to ensure the independence and the impartiality of the valuation provider, according to the PSE.
A top-ranking SEC executive said, however, that this could expose the PSE to reputational risk as the bourse would be involved in the process.
“The issue of valuation is a very, very difficult thing and usually proven wrong over time because it is forward-looking. So there is a reputational impact on the exchange,” the SEC official said.
The SEC said that while there was a problem in terms of conducting a fair valuation, there might be a better solution to the issue instead of PSE taking the risk.
“Is PSE going to get into more trouble by trying to solve it this way? Will the cure be worse than the disease? That is what we are weighing right now,” the SEC official said.
Under the present setup, a company that plans to delist directly taps a fairness valuation provider based on a list accredited by the PSE.
The PSE decided to revisit the current rules amid the concerns raised by minority shareholders on the fairness valuation of Melco Resorts and Entertainment (Philippines) Corp. when it conducted a tender offer related to its planned delisting earlier this year.
The same issue resurfaced this week after Travellers International Hotel Group Inc., the owner and operator of integrated gaming and leisure complex Resorts World Manila, reported that it would delist its shares from the PSE and conduct a tender offer.
TIHGI said it would conduct a tender offer at P5.50 per share, representing the higher part of the P5 to P5.70 range in the fair value opinion of PricewaterhouseCoopers and local partner Isla Lipana & Co.
TIHGI said the tender offer price of P5.50 was 2.3 percent and 0.8 percent higher than the six-month volume-weighted average price and three-month volume-weighted average price, respectively.
