May 26, 2013 – The Andy Meggie Relationship & the Blocks

It seems to be eons ago but we need to refresh ourselves with history once in a while.  Let’s go back in time.

Timeline:

1.) May 28,2009 – Megaworld raises P5.1B from rights offering

Megaworld disclosed to the Philippine Stock Exchange (PSE) that its offer of 5.1 billion shares at P1 each was fully subscribed. Eligible shareholders were allowed to buy one new share for every four shares already owned.

In its disclosure, Megaworld said it was able to raise P3.2 billion from the first round of rights offering, while another P1.9 billion was taken up by parent company Alliance Global Group through BDO Capital and Investments Corp.

2.) Oct 8, 2012 – AGI Jacks Up Stake in Megaworld

Alliance Global Group has cemented its controlling interest in property developer Megaworld Corp. by exercising its right to buy P3.07 billion worth of underlying shares attached to warrants held in the last three years.

The warrants exercised by AGI were part of the 4.1 billion bonus detachable warrants issued by Megaworld in 2009. Megaworld then gave four warrants for every five existing common shares at no cost to all those who subscribed to the company’s P5.1-billion rights offering at that time. Holders of the warrants were given until June 14, 2015, to exercise their right to buy the underlying shares.

The transaction allowed AGI to raise its stake in Megaworld to 65 percent from 56-57 percent.

P1 billion of the proceeds would be used to boost the development of a business process outsourcing (BPO) center in Newport City in Pasay City.

3.) April 3, 2013 – Megaworld: More than half of P4.1B raised from detachable warrants used

Andrew Tan-led property developer Megaworld Corp. on Wednesday said it has used more than half of the proceeds it had raised from offering detachable warrants.In a report to the Philippine Stock Exchange, Megaworld said that as of April 2 it has used some P773 million from the P1 billion allocated for development of a BPO project, while it has spent P1.72 billion from the P3 billion earmarked for working capital.

Megaworld secured the approval of corporate regulators for the issuance of 4.1 billion in detachable warrants in 2009. The warrants were backed by the same number of underlying common shares. For every five existing common shares, Megaworld had given four warrants. The warrants had entitled holders to buy new common share of the company.

The warrants are set to expire in 2015.

4.) May 24, 2013 –  Alliance Global to hike Megaworld stakeAlliance Global to buy P11B worth of Megaworld shares

Andrew Tan’s holding firm Alliance Global Group Inc. will be subscribing to 2.5 billion shares of its property unit, Megaworld Corp., for a total value of P10.725 billion.

Alliance Global said its board of directors authorized the acquisition of the shares at P4.29 apiece which will come from Megaworld’s increase in capital stock.   Megaworld said proceeds from Alliance Global’s subscription will be used for project development, land acquisition, investments and general corporate purposes.

The purchase price is a 5% premium over Megaworld’s 30-day volume weighted average price,  quarter of the subscription price shall be paid during the signing of the subscription agreement, while the balance shall be paid upon the approval of the Securities and Exchange Commission.

As of end-March, Alliance Global owns 11.59 billion shares or 39.53% of Megaworld’s 29.32-billion listed common shares.

Megaworld has programed P35-billion capital expenditure this year, higher than P25 billion in 2012, amid a bullish outlook on the property industry.

The company’s net profit stood at P1.82 billion in the first quarter, up by 15.19% from P1.58 billion in the same period last year.

Revenues were up by 16.43% to P8.15 billion from P7.00 billion in the same comparative period.

4.) PSE Disclosures – May 24, 2013 – http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-4260_AGI.pdf

The Board of Directors of Alliance Global Group, Inc. (the “Company”) authorized the subscription by the  Company to 2.5 billion common shares of Megaworld Corporation (“Megaworld”), to be issued from a  proposed Php10 billion increase in Megaworld’s capital stock. The shares will be subscribed at the price of  Php4.29 per share, for a total subscription price of Php10.725 billion. This represents a premium of 5%  over Megaworld’s 30-day volume weighted average price (VWAP). 25% of the subscription price shall be payable upon signing of the subscription agreement while the balance shall be payable upon approval by  the Securities and Exchange Commission of the increase in Megaworld’s capital stock.

*****

Things To Know (Glossary of sorts, in case I may talk like gibberish to some readers)

Source: http://www.investopedia.com/terms/b/blocktrade.asp

Definition of ‘Block Trade’

An order or trade submitted for sale or purchase of a large quantity of securities. A block trade involves a significantly large number of shares or bonds being traded at an arranged price between parties, outside of the open markets, in order to lessen the impact of such a large trade hitting the tape.

Also known as “Block Order.”

*****

Sources: 2012 Annual Report – AGI , http://www.allianceglobalinc.com/BusinessInterests.aspxhttp://www.megaworldcorp.com/

The Andy Meggie Relationship (Andrew Tan, Megaworld Monopoly)

Andrew Tan is a very good Monopoly player.  When he buys Tenessee Avenue, he buys New York Avenue and St James Place.  When he buys land, he makes sure he covers all the bases.  Check out his entire monopoly of hectares of land within the Philippines.  All sources are properly referenced and public information.

*****

Megaworld Corporation (“MEG” or “Megaworld”), a publicly-listed domestic company incorporated on August 24, 1989, is one of the leading property developers in the Philippines. It is a pioneering developer of large-scale, mixed-use planned communities or townships that integrate residential, commercial, leisure and entertainment, and educational/training components under the “live-work-play-learn” concept. While initially MEG builds only high-end residential condominiums and commercial properties on a stand-alone basis, in 1996, it began to focus on the mixed-used communities in response to the demand for lifestyle convenience of having quality residences in close proximity to office and leisure facilities, primarily for the middle-income market. Its first venture under
this set-up is Eastwood City in Quezon City. It now has ten community townships across Metro Manila, Cebu and Iloilo plus residential condominium projects in Metro Manila.

MEG also engages in other property related activities such as project design, construction oversight and property management. It owns and operates the Richmonde Hotel Ortigas in Pasig City and Eastwood Richmonde Hotel in Quezon City through a wholly-owned subsidiary, Prestige Hotels & Resorts, Inc. Megaworld has P30.2 billion authorized capital
stock and P28.9 billion paid-up capital (both common and preferred stock) as of end-2012.

On February 16, 2007, AGI bolstered its presence in the real estate industry by acquiring, in a share-swap transaction with Dr. Tan, TAGI and Yorkshire Holdings, Inc., an additional 25% interest in Megaworld, which increased AGI’s equity to 46%. AGI further increased its effective ownership interest in Megaworld thereafter through purchases in the market and exercise of stock rights and warrants. By end-2012, AGI holds 63% effective interest in MEG.

*****

Megaworld is primarily engaged in developing large-scale mixed-used communities called “townships” that integrate lifestyle convenience of having high quality residences in close proximity to office, commercial, educational, and leisure and entertainment facilities.Its township projects at present, in which the strategy is to lease all commercial and retail properties and sell all residential units, are as follows:

1.) Eastwood City is Megaworld’s first community township development on approximately 18 hectares of land in Quezon City, Metro Manila. It centered on the development of Eastwood City CyberPark, the first PEZA-approved information technology (“IT”) park in the country to provide offices with the infrastructure to support BPO and other technology driven businesses on a 24-hour basis. Once the entire residential zone is completed, it is expected to contain at least 20 high-rise towers designed according to a specific theme and style (there were 16 towers as of December 31, 2012). The office properties consist of 10 office buildings.The leisure and entertainment zone consists of Eastwood Mall, Eastwood Richmonde Hotel and Eastwood Citywalk, a dining and entertainment hub, Eastwood Citywalk 2, an amusement center with a cinema complex, a billiard and bowling center, and restaurants and specialty shops.

2.) Forbes Town Center is a community township located on 5 hectares of land in Bonifacio Global City, Taguig, Metro Manila adjacent to the Manila Golf Club, the Manila Polo Club and the prestigious Forbes Park residential subdivision. Upon completion, Forbes Town Center is expected to consist of residential, retail and entertainment properties. Once completed, the residential zone is expected to consist of 13 towers (11 towers completed AGI-2012 17-A – 8 as of end-2012) comprising the Forbeswood Heights, Bellagio, Forbeswood Parklane, and 8 Forbes Town Road condominium projects. The leisure and entertainment zone is devoted to bars, restaurants and specialty shops which are designated to complement the residential buildings in this development as well as the surrounding office areas in Bonifacio Global City.

3.) The McKinley Hill is a community township located on approximately 50 hectares of land  in Fort Bonifacio, Taguig, Metro Manila. McKinley Hill consists of office, residential, retail, educational, entertainment and recreational centers.The residential zone consists of subdivision lots for low-density single-detached homes and low-rise (5 or 6-storey) garden villa clusters. In addition, the Stamford Executive Residences, the Morgan Executive Residences, each consisting of three residential clusters, and the Venice, a two-cluster development, are under construction. The office properties will include the McKinley Hill Cyberpark which is a PEZA-designated IT special economic zone. Tenants of the office properties will largely be comprised of software developers, data encoding and conversion centers, call centers, system integrations, IT and computer system support. The leisure and entertainment zone is expected to have a Venetian theme and to consist of bars, restaurants, specialty shops, cinemas and sports complex, to complement the office and residential areas in the community township. First phase of the zone was completed in 2009. Three international schools, the Chinese International School, the Korean International School and Enderun College, a hotel management institution affiliated with Les Roches of Switzerland, will initially comprise the “learn” component of the township.

McKinley Hill is likewise home to the British Embassy which relocated on a 1.2 hectare property and Korean Embassy which is located on a 5,800 square meter site within the development. In 2013, the Emperador Stadium, a soccer stadium with capacity for 2,000 spectators (and expansion capacity for an additional 3,000) opened in the leisure and entertainment zone. The stadium is being leased for an initial 4-year term to the United Football League.

4. Newport City is a community township located on 25 hectares of land that was previously part of the Villamor Air Base in Pasay City, Metro Manila, across from the NAIA Terminal 3 and adjacent to the Villamor golf course. The Newport City similarly integrates the livework-play concept of Eastwood City, with the exception that it will be targeted towards tenants and buyers who consider proximity to the NAIA Terminal 3 an advantage. The residential zone, upon completion, will consist of 40 eight- to nine-storey medium-rise buildings that are grouped in clusters of five to six buildings. Pre-selling began for the first cluster in 2005. A PEZA special economic cyberpark will be established in the commercial zone, as well as grade A office buildings. Tenants for the commercial area are expected to include multinational BPO companies, cargo logistics services and airline-related business. The leisure and entertainment zone is expected to consist of space which will be leased to tenants who will operate bars, restaurants, retail and tourist oriented shops, which are designed to complement the office and residential buildings in the community township.

Newport City is home to Resorts World Manila, which is a leisure-and-entertainment complex comprising gaming facilities, restaurants, hotels, and shopping outlets, among others, which opened in August 2009.

The hotel zone includes Marriott Hotel Manila, Maxims Hotel and Remington Hotel which are under Travellers. There are two other hotels being constructed which are “condotel” projects of Megaworld, wherein all hotel rooms are sold to buyers, who then lease back the rooms to Megaworld for use as hotel rooms. Through these arrangements, Megaworld not only derives property development fees, but also recurring management fees for maintaining the rooms utilized by the hotels. The Belmont Luxury Hotel is expected to formally open in late 2015 while the Savoy Hotel in 2016. Travellers is also set to add two global hotel brands.

5. Manhattan Garden City is a residential development project which will consist of 20 residential towers on a 5.7-hectare property at the Araneta Center in Cubao, Quezon City. The Manhattan Garden City will be the Philippines’ first major transit-oriented residential community, having direct links to two light rail transport lines, the MRT-3 and the LRT- 2.

The MRT-3 line runs north to south along the EDSA highway in Metro Manila while the LRT-2 line runs east to west along Aurora Boulevard across Metro Manila. All key areas along the transportation lines within Metro Manila will be easily accessible from the
development. The amenities of the Araneta Center such as the Gateway Mall will be available to residents of Manhattan Garden City.

6.)  Cityplace is 2.5-hectare mixed-use development project in Binondo, Metro Manila. It is expected to have at least 2,000 residential condominium units and a shopping center called Lucky Chinatown Mall. The development includes new green parks, a public car parking facility, new bypass roads and pedestrian overpasses to make the project environment and pedestrian-friendly.

7. The Mactan Newtown is a mixed-use township development in a 25 hectare property near Shangri-La Mactan Resort and Spa in Mactan, Cebu. It is expected on completion to have high-tech offices, a retail center, residential villages, leisure facitlites and beach front resort. Development of the first luxury condominiums began at The Mactan Newtown, 8 Newtown Boulevard and One Pacific Residence towers. The Mactan Newtown is conferred with PEZA special economic zone status.

8. Iloilo Business Park is a mixed-use master-planned community in a 54.5 hectare property in Mandurriao, Iloilo, site of the old Iloilo airport. It is expected to comprise of BPO offices, hotels, a convention center, commercial and retail centers, a skills training center, recreational facilities and a transportation hub. The entire project was registered as a special economic zone with the government, which will allow it to benefit from a tax holiday period as well as other incentives for investors. In addition, Megaworld Center Mall, an upscale shopping mall will be built in the project.The convention center is expected to have 3,700-seating capacity on a 1.7-hectare portion of the park. Megaworld is also developing an approximately 18-hectare adjacent land into a high-end residential community.

9. Uptown Bonifacio is a community development on a 15.4 hectare property in the northern district of Fort Bonifacio, Taguig. Bonifacio Uptown comprised a residential portion in the northern part of Fort Bonifacio, and a portion for mixed-use on a parcel of land owned by NAPOLCOM. The Company will develop Bonifacio Uptown under a joint venture arrangement with the BCDA and NAPOLCOM. The first residential tower commenced pre-sales in third quarter of 2011.

10. McKinley West is a development on a 34.5 hectare portion of the Joint United States Military Authority Group (JUSMAG) property owned by BCDA and located across from McKinley Hill in Taguig, Metro Manila. The development of McKinley West into a mixed use project is another joint venture undertaking with the BCDA.

*****

AGI is sitting in a boatload of cash.  It makes sense to buy your own company when you believe it’s undervalued.

2012 Annual Report (Balance Sheet) shows P68.3 Bil in cash.  The P10 Bil (with a 25% installment plan) can easily be paid for by AGI.

2.5 Bil shares that AGI will subscribe from MEG will be newly issued shares.  It will have a temporal dilutive effect. There’s currently 29.4 Bil outstanding shares with a 34.5% float level.

 

AGI Balance Sheet

For other interrelated data,

May 26, 2013 – Inquire Lifestyle – Kevin Tan takes a bride

They say love makes other people more inspired so hoping that MEG and AGI reaches and conquers new heights 🙂

Favorable Price Entries:

—-MSCI Rebalancing this end of May 2013

– Faceless Trader

(Disclosures: Faceless Trader’s opinions are her own and not affiliated with any other brokerage firm.  Please also note that the author is long the share as of writing.  Any biases of opinion is held as a default.  Thank you.)

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One Response to May 26, 2013 – The Andy Meggie Relationship & the Blocks

  1. WarrenB says:

    Very nice…

    Like

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