SEC to treat block sales as part of tender offer

As an additional revenue source, the Securities and Exchange Commission (SEC) will treat block sales of shares of stocks that will later be subject to tender offer as part of the tender offer process itself.

In an en banc meeting last week, the SEC said "all block sales of shares of stocks that shall trigger a tender offer shall be assessed a filing fee for purposes of filing a tender offer statement with the commission."

"Said block sales shall be considered as forming part of the said tender offer," the SEC added.

Under the Securities Regulation Code, the SEC requires the individual or group acquiring majority stake in a company to make the mandatory tender offer. This process will be charged a filing fee of not more than one-tenth of one percent of the proposed aggregate purchase price or the proposed payment in cash, and the value of any securities or property to be transferred in the acquisition.

With this in effect, the impending sale of the 83.2-percent interest of RFM Corp. in Cosmos Bottling Corp. (CBC) to the San Miguel group will be put to the test.

Based on the share purchase agreement between RFM and the SMC group, the 83.2-percent RFM stake in CBC will be sold at P6.045 per common share, or a total of about P11.6 billion. For 100 percent of CBC, the transaction value will amount to P14 billion.

At the aggregate purchase price of P14 billion, the filing fee alone would amount to about P14 million.

Since CBC is listed at the Philippine Stock Exchange, the sale will be crossed in larger blocks to finalize the deal. After the block sale, the SMC group will then have to file the mandatory tender offer sheet to the remaining minority shareholders of CBC.

The mandatory tender offer requirement is imposed to give the minority shareholders the opportunity to sell their shares at the same price which the majority shareholders sold their shares in cases where there is a change in control of the company.

In an earlier disclosure, SMC corporate secretary Francis Jardeleza said the proposed date for the tender offer will likely fall between the third week of January and the first week of February 2002.

He said since the closing date for the Cosmos acquisition is tentatively scheduled on the third week of this month (targeted to be on Dec. 21) SMC – through its subsidiary Coca Cola Bottlers Philippines Inc. and the Atlanta-based The Coca Cola Co. – will file the tender offer sheet with the SEC at least 10 days from this date.

The CBC shares to be acquired consist of 1,926,858,190 common shares and 1,000 preferred shares. Assets to be received consist of assets in CBC and its two subsidiaries Cosmos Visayas Bottlers Inc. and Cosmos Bacolod Bottlers Inc. but exclusing Cosmos’ interest in First Water Bottling Corp. – Conrado Diaz Jr.