The P1.74-billion tender offer by Holderfin B.V. for the remaining 5.05 percent stake in Holcim Philippines Inc. held by the public has hit a major snag as it will be subject to additional taxes following the suspension on the trading of the company’s stock by the Philippine Stock Exchange.
Holderfin is offering to acquire 325.58 million Holcim Philippines shares from minority shareholders at P5.33 per share with the aim of delisting the stock from the PSE. The tender offer runs from July 10, 2023, to August 30, 2023.
PSE suspended trading on Holcim shares last June 29, after the Company’s public float fell below the minimum public ownership (MPO) requirement of 10 percent.
The breach in the MPO requirement happened following Holderfin B.V.’s (Holderfin) purchase of 9.22 percent of HLCM’s outstanding capital stock from Sumitomo Osaka Cement Co., Ltd. Following the transaction, Holcim’s public float went down to 5.05 percent.
“Since trading in HLCM shares is presently suspended, the sale of the tendered shares will be subject to capital gains tax (CGT) and documentary stamp tax (DST) instead of the standard stock transaction tax (STT),” said the PSE.
It noted that, “This tax treatment is EXPRESSLY provided for in Bureau of Internal Revenue (BIR) Regulation No. 16-2012 (RR 16-2012) that requires every sale, barter, exchange or other disposition of shares of stock of a publicly listed company which is non-compliant with the MPO to be subject to CGT and DST.”
Aside from the applicable tax rate, the PSE said the shareholders have to facilitate all the documentary requirements, including the relevant tax clearance from the BIR, needed to transfer shares sold outside of the Exchange.
“HLCM now wishes to assign the responsibility of addressing this tax predicament to the Exchange by informing shareholders that the matter can only be resolved if the suspension on its shares will be lifted by PSE,” said the PSE.
It stressed that, “The PSE takes strong exception to this ‘finger-pointing’ attempt of the Company. The lifting of the suspension is not a discretion or prerogative that can be exercised by PSE. It is a regulation covered and imposed under BIR RR 16-2012. PSE has always upheld and will continue to uphold, not violate, existing laws and regulations.”
“These problems and concerns would not have arisen had the parties involved, HLCM and Holderfin (also a part of the Holcim Group) took into consideration the interest of its public shareholders before implementing the share transaction between Holderfin and Sumitomo,” said the PSE.
It added that, “They should have thoroughly considered the repercussions of the Holderfin share purchase on its public float before implementing the same.”
The bourse cited that there were several publicly listed companies that have similarly tendered for their shares in the last five years in preparation for their delisting from the Exchange.
However, it pointed out that, “These responsible companies made sure that before executing any transaction or corporate action, they would not breach the MPO and get the trading of their shares suspended.
“Accordingly, the sale of their tendered shares was done through the facilities of the Exchange thereby subjecting the transaction to just the STT, to the best interest of its public shareholders.”
However, a stock analyst noted that in 2018, the PSE had allowed a stock to resume trading after its public float fell to about five percent. He noted that, the stock was suspended for 11 days but then allowed to resume trading even though its float was cured only after a stock sale later in the year.