Premiere Horizon Alliance suspended after it takes on P600 million of SquidPay’s obligations

Premiere Horizon Alliance's [PHA 1.11] disclosure said that SquidPay gave PHA 60% of SquidPay’s P900m obligation to obtain a 60% stake in Philstar Development Bank, the subsidiary of a subsidiary of AbaCore Holdings [ABA 1.08 4.85%]. As the disclosure notes, the assignment just makes PHA a formal party to the memorandum of agreement between SquidPay and Philstar Development Bank. Instead of SquidPay giving Philstar Development Bank P900m for a 60% stake, now PHA will step into SquidPay’s shoes to pay P600m to Philstar Development Bank for a 40% stake, with SquidPay still holding 20%.

The purpose of the venture is to “target the ever-growing need for cashless payments”, and PHA said that this investment was aligned with its “vision of countryside development and financial inclusivity”. The PSE at first halted PHA’s stock, thinking that the transaction was material, then later suspended the stock indefinitely under the “substantial acquisitions rule”, pending PHA’s “comprehensive disclosure” of the deal itself and the impact that it will have on PHA.

MB BOTTOM-LINE

 Hard to figure out what’s going on here. SquidPay is owned by Marvin Dela Cruz, who also happens to have just recently purchased PHA, supposedly as a backdoor IPO for SquidPay. While Marvin Dela Cruz and his investor group completed the takeover of PHA a little while ago, they have done so without yet putting in any of SquidPay’s assets. The agreement between PHA and Mr. Dela Cruz does not require that injection to happen.

So, from a PHA investor’s perspective, is this deed of assignment a good idea? Who can know, based on the information that we have. But that’s exactly why the stock’s been suspended! Hopefully, PHA will provide a clear explanation of what’s happened, and how shouldering two thirds of SquidPay’s investment into this potential digital bank will pay off for PHA investors. I mean, we all understand what Mr. Dela Cruz has to gain from diverting PHA’s funds into this venture; we’ll have to wait to find out what us out-of-the-loop retail investors in PHA will get out of the deal.

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