SEC asked to block questioned tender offer and backdoor listing of Okada resort operator.
A SHAREHOLDER of Asiabest Group International, Inc. (ABG) asked the Securities and Exchange Commission (SEC) to stop the tender offer and the implementation of a backdoor listing by Tiger Resort Asia Limited, saying that its non-disclosure of legal proceedings involving ownership and control of Okada Holdings Limited operates as a fraud on ABG shareholders and the investing public.
In his complaint filed by his lawyers, Salvador Paolo Panelo Jr. and Kathleen Mativo of the Panelo Law Office on December 5, 2018 with the SEC’s Market and Securities Regulation Department (MSRD), ABG shareholder Atty. Carnell S. Valdez accused Tiger Resort of violating the Implementing Rules and Regulations of the Securities Regulation Code (SRC Rules) for not disclosing in its Tender Offer Report about the case filed by Japanese billionaire and founder of UEC, Kazuo Okada, and his daughter Hiromi Okada.
Okada Holdings is the controlling shareholder of JASDAQ-listed Universal Entertainment Corporation (UEC), which in turn is the 100 percent owner of Tiger Resort, which wholly owns Tiger Resort Leisure & Entertainment, Inc., operator of casino hotel Okada Manila.
Kazuo Okada and his daughter had initiated civil and criminal proceedings in Hong Kong to regain control of Okada Holdings, and to secure criminal convictions for fraud and financial crimes those responsible for his ouster as sole director and/or chairman of Okada Holdings, UEC, Tiger Resort and Okada Holdings in 2017. Those charged include Kazuo Okada’s son Tomohiro Okada, and Jun Fujimoto, current President and CEO of UEC.
Earlier, Tiger Resort entered into a share purchase agreement with controlling shareholders of ABG, with the intention of backdoor listing Okada Manila with the Philippine Stock Exchange (PSE) via ABG.
The move required Tiger Resort to conduct a tender offer for all remaining shares of ABG, which commenced on November 12, 2018. The Tender Offer period ends on December 12, 2018, and is slated to close via special block sale with the PSE on December 14, 2018.
However, SRC rules prohibit Tiger Resort from omitting material facts in its Tender Offer Report, a disclosure required to be disseminated to ABG shareholders and published in the PSE in connection with the Tender Offer. Valdez said Tiger Resort’s Tender Offer report contains no information regarding the legal proceedings initiated by Kazuo and Hiromi Okada.
Valdez claims that this is an omission of a material fact, which is prohibited by the SRC Rules, adding that this affects the stability and profitability outlook of ABG under the control of Tiger Resort.
“If the Tender Offer proceeds unrestrained, this may result in grave and irreparable damage to ABG, its shareholders and investing public as the outcome of the Hong Kong legal proceedings may result in the nullification of the Tender Offer and Backdoor Listing,” said Valdez.
The complaint states that under Philippine law, contracts entered into by corporate officers beyond the scope of their authority are not binding against the corporation.
Valdez adds that the backdoor listing may also amount to a circumvention of the PSE’s Suitability Rule because it will put the embattled Tomohiro Okada, Jun Fujimoto, et al. in control of ABG. Under PSE rules, a company is not suitable for listing if there are serious questions on the integrity or capability of a company’s directors, officers or control persons.
Valdez argues in the Complaint that the legal proceedings in Hong Kong may disqualify Tiger Resort from listing with the PSE.
In a statement, Atty. Panelo said that aside from the obvious violations of the SRC Rules, the Tender Offer and Backdoor Listing should be stopped by the SEC because the disputes involving the ownership and control of the Okada group should be contained.
“The SEC should not allow the dispute to spill over to ABG, to the detriment of its current and future shareholders, and at the expense of confidence of the investing public in the PSE,” said Panelo.
Panelo added that the timing of the planned backdoor listing is in fact suspect in view of the ongoing dispute and reports that Kazuo Okada is primed to regain control of the Group.
“It would be less objectionable if Mr. Okada supports the plans to list Okada Manila, but it appears that this is not the case. The SEC should not allow ABG shareholders and the investing public to bear the brunt of the many possible ill effects of the dispute,” Panelo pointed out.
