Saturn Holdings gets exemption from tender offer rule

The Securities and Exchange Commission (SEC) has ruled that the recent purchase by Saturn Holdings Inc. of a 94-percent stake in Balabac Resources & Holdings Co. Inc. is not covered by the agency’s tender offer requirements.

The SEC cited Section 19 of the Securities Regulation Code as reason for its decision to exempt the acquisition by Saturn of a controlling stake in Balabac from the requirements of a mandatory tender offer under the Securities Regulation Code.

Under the said law, the SEC may exempt a transaction from the mandatory tender offer requirement if it involves the purchase of new, unissued shares.

The deal involves the subscription by Saturn of P1.23-billion worth of Balabac shares, which will come from the listed firm’s increase in capital stock from P73.8 million to P5 billion.

Under the SRC, all acquisitions involving 35 percent or more of a listed company would trigger a mandatory tender offer. This means that more purchase would have to offer to buy the remaining shares held by minority shareholders at the same terms given to the majority owners.

Saturn, a member of the Lucio Tan Group of Companies, replaced Cavite-based real estate development firm Round Peak Realty & Development Corp., which was earlier identified by Balabac as the buyer for the new shares. It has a 2.13-percent stake in Tanduay Holdings Inc.

Balabac was incorporated in April 1971 to engage in oil exploration and mineral development projects. In line with its diversification during the third quarter of 1997, the company changed its corporate name from Balabac Oil Exploration and Drilling Co. into what it is known today. With the change in its corporate name, the company likewise changed its primary purpose to that of a holding company and making real estate development and oil exploration among its secondary purposes.

With Unioil Inc., BAL has formed the real estate company, B.U. Properties Corp. The joint venture’s initial project, the Unioil Center, was completed in September 1996 with all 20 units sold to the market. It is a first class nine-storey office condominium building strategically located at the Madrigal Business Park in Ayala Alabang Construction.

At present, 100 percent of the company’s oil exploration-related assets and service contracts were transferred to Phoenix Energy Corp., another oil exploration company wherein Balabac has 38.4-percent interest. As a holding company, the revenue of Balabac Resources consist only of its equity earnings in its, affiliated company, B.U. Properties Corporation since both Phoenix Energy Corporation and Phoenix Gas and Oil Exploration has no commercial operation. – Zinnia dela Peña