CURRENT REPORT UNDER SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17.2(c) THEREUNDER
1. Date of Report (Date of earliest event reported)
Jul 5, 2023
2. SEC Identification Number
CS200411461
3. BIR Tax Identification No.
CS200411461
4. Exact name of issuer as specified in its charter
Megawide Construction Corporation
5. Province, country or other jurisdiction of incorporation
Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
No. 20 N. Domingo Street, Barangay Valencia, Quezon CityPostal Code1112
8. Issuer's telephone number, including area code
(02) 8655-111
9. Former name or former address, if changed since last report
N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common
2,013,409,717
Preferred
92,405,880
11. Indicate the item numbers reported herein
Item 9
The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.
Megawide Construction CorporationMWIDE
PSE Disclosure Form 5-1 - Substantial Acquisitions References: SRC Rule 17 (SEC Form 17-C) and Section 4.4 and/or Section 5 of the Revised Disclosure Rules
Subject of the Disclosure
Acquisition by Megawide Construction Corporation (the "Company") of 100% of the outstanding capital stock of PH1 World Developers Inc. ("PH1") from Citicore Holdings Investments Inc. ("CHII")
Background/Description of the Disclosure
On July 4, 2023, the board of directors of the Company approved the acquisition by the Company of 100% of the outstanding capital stock of PH1 World Developers Inc. from CHII at a purchase price of PhP5.2 Billion (the "Acquisition")
The Acquisition is still subject to the approval of the stockholders at the 2023 Annual Stockholders Meeting to be held on July 12, 2023.
Date of Approval by Board of Directors
Jul 4, 2023
Date of Approval by Stockholders
TBA
Other Relevant Regulatory Agency, if applicable
Philippine Competition Commission (Confirmation of Letter of Non-Coverage)
Date of Approval by Relevant Regulatory Agency
TBA
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction
The acquisition of PH1 is part of the Company’s business strategy for forward integration. The Company acknowledges that real estate development is a natural progression for construction companies. Such forward integration to real estate is expected to create more value within the Megawide group.
Description of the transaction including the timetable for implementation and related regulatory requirements, if any
The Company will acquire 100% of PH1 from its affiliate, CHII through a Share Purchase Agreement (the "Agreement") (the "Transaction").
At the parent level (i.e., in the Company's Audited Financial Statements), the acquisition will be considered as an investment in a subsidiary while at a consolidated level (i.e., in MCC's Consolidated Audited Financial Statements) , it will be a line-by-line take up.
The transaction will be conducted through the sale of shares of CHII. in PH1 to Megawide, and is expected to be concluded via a cash transaction.
The Acquisition is still subject to the approval of the stockholders at the 2023 Annual Stockholders Meeting to be held on July 12, 2023.
Subject to the stockholders’ approval, the signing of the Agreement is expected to take place on July 12, 2023. Subject to the fulfillment of the conditions precedent under the Agreement, the closing of the Acquisition is expected to take place on July 27, 2023.
Apart from securing a Philippine Competition Commission Confirmation of Letter of Non-Coverage, in compliance with SEC's rules on related party transactions of publicly listed companies, the Company will submit an Advisement Report to the SEC no later than 3 days from execution of the Agreement.
Identities of the parties to the transaction
Name
Nature of Business
Nature of any material relationship with the Issuer, their directors/officers or any of their affiliates
Citicore Holdings Investment, Inc.
Holding Company
CHII is the parent company of the Company.
Terms and conditions of the transaction
The nature and amount of consideration (e.g. price per share, the aggregate amount)
The consideration for the acquisition by the Company of 100% of the outstanding capital stock in PH1 World Developers Inc. or 579,457,844 common shares is PhP5.2 Billion or PhP8.97 per share.
Basis upon which the amount of consideration or value of the transaction was determined
The Purchase Price was arrived at after a careful deliberation by the Company and valuation study of PH1 World Developers Inc. in accordance with the 2022 International Valuation Standards.
Based on the Fairness Opinion Report issued by FTI Consulting Philippines, Inc. on the Acquisition, using the Sum-Of-The-Parts valuation method, the Total Purchase Price is fair from a financial point of view.
The number of shares to be acquired
579,457,844
Ratio/percentage to total outstanding capital stock
100
Terms of payment
Lump sum payment shall be made on closing date (i.e., after the conditions precedents under the Agreement have been satisfied).
Conditions precedent to closing of the transaction, if any
The Acquisition is subject to conditions precedents that are customary for the nature of the transaction (e.g., corporate approvals, the parties’ representations and warranties are true and correct, and there is no proceeding pending or threatened to enjoin the transaction)
Description of the company subject of the transaction
Nature and business
PH1 is a real estate company engaged in the business of buying, selling, leasing, developing and managing real estate properties. PH1 was registered with the SEC on February 6, 2009 and has a principal office at No. 20 n. Domingo Street, Barangay Valencia, Quezon City.
Discussion of major projects and investments
PH1's principal products include condominiums and residential units that are affordable to mid-income market.
The following are its projects:
i. The Hive, located at San Isidro Street, Ortigas Avenue Extension, Taytay, Rizal. – developed ii. My Ensô Lofts, located at Timog Avenue, Quezon City – on-going iii. Modan Lofts Ortigas Hills located at Ortigas Avenue Extension, Taytay, Rizal – on- going
List of subsidiaries and affiliates, with percentage holdings
Effect(s)/impact on the business, financial condition and operations of the Issuer
The acquisition is expected to result in the reduction of production costs and improvement the Megawide group’s efficiency. Property development is a natural progression for construction companies and the partnership between PH1 and Megawide - beyond a client-contractor relationship - the Company believes will create better value to both companies and accelerate the enhanced living experience for more Filipino households.
Other Relevant Information
Please see attached: 1. PH1's Certificate of Incorporation; 2. PH1's Amended Articles of Incorporation; 3. PH1's Amended By-Laws; 4. PH1's 2022 General Information Sheet; and 5. PH'1's 2022 AFS.
The following are described above: 1. List of subsidiaries and affiliates, with percentage holdings; 2. Capital structure; 3. Organizational structure, including percentage holdings; and 4. Board of Directors, principal officers and major shareholders.
PH1 with a goal to build a diversified portfolio focused on growing horizontal and vertical project developments, formed subsidiaries in 2022 and 2023 to realize the vision of diversification.
PH1 operates all vertical developments. In order to align with its expansion, Ph1 World Landscapes was formed in 2022 as a fully owned subsidiary to operate horizontal developments. To add on horizontal development in 2023, Famtech Properties Inc was acquired by PH1 World Developers, Inc. with 50% shares, in partnership with Profriends Communities Inc. owning 50% shares as well.
Megawide Construction CorporationMWIDE