{"id":324212,"date":"2023-07-26T20:05:40","date_gmt":"2023-07-26T12:05:40","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324212"},"modified":"2023-07-26T21:16:57","modified_gmt":"2023-07-26T13:16:57","slug":"free-holcim-hlcm-tender-offer-tax-issue","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/free-holcim-hlcm-tender-offer-tax-issue\/","title":{"rendered":"HLCM tells tendering shareholders: Wait as we iron out tax issues"},"content":{"rendered":"\n

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Analysis and Recommendation<\/h2>\n\n\n\n

Holcim Philippines Inc. (HLCM) has been suspended from trading following a drop in minimum public ownership (MPO) to 5.05% from 14.27% when Sumitomo Osaka Cement Co., one of HLCM’s majority shareholders, sold its 595 million common shares to Holderfin B.V., another majority shareholder of the company. (See also: Holcim Philippines (HLCM)\u2019s slick move shows how delisting can be quietly done<\/a>)<\/p>\n\n\n\n

Apparently, things are not that easy as a BIR ruling back in 2012 (BIR RR No. 16-2021) imposes a capital gains tax (CGT) of between 5%-10% and Documentary Stamp Tax (DST) on the sale of shares instead of the lower Stock Transaction Tax of 0.60%.<\/p>\n\n\n\n

Moreover, tendering shareholders will be burdened by additional documentary requirements such as Certificate Authorizing Registration (CAR) and\/or Tax Clearance Certificate (TCC) as a prerequisite to tender their shares. As such, the company advises remaining shareholders to hold on to their shares as Holcim irons out the regulatory and tax issues.<\/p>\n\n\n\n

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Minority shareholders who will tender their shares will likely be burdened by additional documentary requirements such as Certificate Authorizing Registration and\/or Tax Clearance Certificate (TCC (Photo credit: Cemnet.com)<\/em><\/figcaption>\n<\/figure>\n\n\n\n
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Our View: <\/strong>HLCM’s move was not too slick after all. <\/p>\n\n\n\n

HLCM made a slick move when it surprised the market with its acquisition of Sumitomo\u2019s stake which caused its float level to drop below the MPO of 10% making voluntary delisting inevitable. Such was the case until BIR\u2019s RR No 16-2021 which will make it more cumbersome and expensive for minority shareholders to tender the remaining 5.05% of HLCM even at the higher price of P5.33\/share.<\/p>\n\n\n\n

This makes us wonder, if HLCM secured the remaining 9.22% block owned by Sumitomo, why didn\u2019t they just file for a tender offer and approve an eventual delisting similar to Metro Pacific Investments Corp. (MPI)<\/a>? <\/p>\n\n\n\n

After all, they were willing to offer a higher price anyway. Hindsight is certainly 20-20 and blunders like this serve as an essential reminder for those wanting to delist from the exchange.<\/p>\n\n\n\n

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