LBC to appeal SEC denial of follow-on offering

MANILA, Philippines - LBC Express Holdings Inc., the listed logistics company of the Araneta family, will appeal to the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) in relation to its planned follow-on offering after the corporate regulator rejected the company’s application, citing failure to disclose a string of pending cases filed by the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) against its owners.

“The company hopes to continue engaging with both SEC and PSE to determine its options given the SEC order, and hopefully arrive at a resolution addressing the concerns of the regulators, the company and its stakeholders,” LBC said.

The SEC said it rejected LBC’s amended registration statement filed on March 21, 2017 for the registration of up to 69.1 million common shares for its follow-on offering due to its non-disclosure of material information in its prospectus as required under the Securities Regulation Code, the country’s corporate blueprint.

The SEC said that in the course of the review of the company’s registration statement, the Markets and Securities Regulation Department discovered there are pending cases filed by the BSP and the PDIC against persons of the company.

“LBC wilfully omitted the details of the pending criminal and administrative cases such as estafa and conducting business in an unsafe and unsound manner filed by PDIC and BSP against members of the Araneta family, among others. Based on records, the Aranetas are the control persons of LBC through LBC Development Corp. which is wholly owned by the Aranetas. The significance of the subject cases necessitates a full and fair disclosure, which LBC failed to do,” the SEC said.

Furthermore, the SEC said LBC did not disclose the status of its application with the PSE.

“In addition, LBC failed to disclose the material information pertaining to the listing application of the LBC Private Placement Transaction. LBC merely stated in its application that the listing covering private placement transactions are currently being reviewed by the PSE. However, the representation by LBC is contrary to the information obtained by MSRD from PSE. In its letter dated March 13, PSE confirmed that LBC’s listing application covering follow-on offering, backdoor listing shares are deemed voluntarily withdrawn effective August 15, 2016,” the SEC said.

The PSE also stated that in light of the pendency of Civil Case No. 15-1258 filed by PDIC against LBC and certain members of the Araneta Group, the ongoing proceeding raised serious concerns with regard to LBC’s compliance with the PSE Suitability Rule.

As such, the PSE decided to defer the processing of the listing application covering the Investment shares, the public shares, the backdoor listing shares and follow-on offering, pending the resolution of the said suitability issues.

Responding to the issues raised by the SEC, the LBC said it had no intention to withhold any information.

“In response to the SEC’s requirement, the company had taken steps and measures to expand the scope of the information on the legal proceedings involving certain members of the Araneta Family. However, due to the timing of the submission, the SEC may not have had sufficient opportunity to consider these additional and expanded disclosures,” LBC said.