SM Investments denies any violation of disclosure rules during IPO

SM Investments Corp. (SMIC), the listed investment holding company of retail magnate Henry Sy, denied allegations it violated disclosure rules after it failed to disclose during its initial public offering (IPO) some information on a court case involving its 93 percent owned subsidiary Manila Southcoast Development Corp. (MSDC).

This was in response to a complaint filed by Domingo Villfranca and Nomer Del Mundo, who claimed ownership of MSDC’s Hacienda Looc, a 57.5 hectare seaside property in Nasugbu, Batangas. The property was acquired by MSDC from the government through a public bidding in 1994.

SMIC said the complaint had already been dismissed by the Nasugbu regional trial court due to forum shopping. The court also said it had no jurisdiction over the case, which should be handled instead by the Department of Agrarian Reform.

The complainants, however, are expected to appeal their case to the Supreme Court.

SMIC said MSDC was granted a permit in November last year to develop the property for leisure and tourism activities.

Hacienda Looc was valued at P12.3 billion and is the fourth-largest asset in SMIC’s book.

Citing Sec. 13.1 of the Securities Regulation Code, the complainants said the Securities and Exchange Commission "may reject or revoke effectivity of a registration statement if the issuer has made any false or misleading representation of material facts in any properties concerning the issuer."

The SEC approved last month SMIC’s registration statement which paved the way for the listing of the company’s shares at the Philippine Stock Exchange last March 22.

The complainants said the undisclosed facts are material facts that "will materially affect the value and marketability of the shares of the SM Group."

In the nine months ending December 2004, SMIC posted a net income of P3.91 billion on revenues of P42.17 billion. Its assets stood at P111.89 billion while stockholders’ equity was P35.27 billion.

SMIC holds Sy’s interests in tourism, department store operations, financial services, and real estate development.

Proceeds from the IPO will be used largely for projects related to property development, tourism and leisure and the rest for the settlement of loans.