PSE rules DHI merger with Tampakan copper-gold firms a backdoor listing, suspends trading
The Philippine Stock Exchange has ruled that Dominion Holdings' planned merger with two companies holding Sagittarius Mines is a backdoor listing. Trading in DHI shares was suspended from 26 Aug pending compliance with backdoor listing rules.
The Philippine Stock Exchange (PSE) has ruled that Dominion Holdings, Inc.’s (DHI) planned merger with two companies that collectively hold 100 per cent of the voting rights in Sagittarius Mines, Inc. (SMI) falls under its Revised Rules on Backdoor Listing, with trading in DHI shares suspended pending compliance.
In a notice on Wednesday, the PSE said it reached the determination after evaluating the transaction and conducting a comprehensive review of DHI’s disclosures, submissions and representations. The Exchange said the transaction is covered by its revised backdoor-listing rules primarily because of the resulting substantial change in DHI’s business.
“Accordingly, trading of DHI’s shares was suspended pending the company’s compliance with the applicable requirements under the Revised Backdoor Listing Rules,” the PSE said. The suspension took effect at 9:55 a.m. on 26 Aug, with the lifting date still to be announced. The suspension follows a trading halt imposed by the PSE on 20 Aug, when the exchange said it was awaiting additional information from DHI on the proposed merger.
DHI’s board earlier approved the merger with Indophil Resources Phils., Inc. and Sonar Holdings, Inc., with DHI as the surviving entity. Under the proposed transaction, all assets and liabilities of Indophil and Sonar will be transferred to DHI in exchange for DHI shares to be issued to shareholders of the two companies, subject to corporate and regulatory approvals. Indophil and Sonar collectively hold 100 per cent of the voting rights in SMI, which holds the Financial and Technical Assistance Agreement covering the Tampakan Copper-Gold Project in South Cotabato. DHI has said that following the merger, it will hold 100 per cent of SMI’s voting rights and acquire controlling ownership of the mining company.
The PSE also cited a 19 Jan share purchase agreement between BDO Unibank, Inc. and Monte Sur Equity Holdings, Inc. covering 1,513,732,718 DHI shares, equivalent to 70 per cent of the company’s outstanding capital stock, which triggered a change in control of DHI. DHI’s board also approved and endorsed for shareholder approval an increase in its authorized capital stock to P30 billion from P3.42 billion in connection with the merger. The company has said the capital increase will also support future capital-raising efforts and expansion programs.
DHI shareholders are scheduled to vote on the proposed merger and capital increase at the company’s annual stockholders’ meeting on 14 Sept. The merger remains subject to approval by the stockholders of the constituent companies, confirmation of non-coverage from the Philippine Competition Commission, and approval by the Securities and Exchange Commission. The exchange ratio for the merger has yet to be determined, with management authorised to finalise the ratio in consultation with an independent fairness valuator that will determine the appropriate values of DHI, Indophil and Sonar. The number of DHI shares to be issued as part of the transaction has also yet to be determined.
DHI, formerly BDO Leasing and Finance, Inc., changed its corporate name in 2022 as part of BDO’s plan to repurpose the company into a holding company. DHI has said the Tampakan-linked transaction is aligned with its previously disclosed plan to remain a holding company primarily invested in mining companies. As of 19 Aug, PSE data showed DHI had a market capitalisation of about P33.73 billion and a free float of 21.12 per cent. DHI shares were last traded on 19 Aug at P15.60 apiece, unchanged from the previous session.
