BDO Leasing and Finance Inc. (BDOLF) said there is “no sufficient grounds” for the suspension by the Securities and Exchange Commission (SEC) of its registration statement.
The order was issued in light of the Share Purchase Agreement dated Jan. 24, 2020 entered into by BDO Unibank, Inc. to sell its controlling stake in BDOLF to third parties and the subsequent amendment of BDOLF’s primary business to a holding company. On this basis, the SEC ruled that BDOLF’s registration statement as a leasing and financing company was no longer true and accurate. Hence, the SEC ordered the suspension and required the filing of an amended registration statement.
“BDOLF intends to seek reconsideration and engage the SEC on this matter as soon as possible. BDOLF believes that there are no sufficient grounds for the suspension of its Registration Statement. Both BDOLF and BDO Unibank, Inc. have consistently been upfront and have made full, timely and fair disclosures regarding this transaction and all the steps leading to it. Further, the protection of minority shareholders has always been considered by BDOLF,” it added.
The company said minority shareholders “are vested with appraisal rights and the mandatory tender offer will allow them to sell their shares at a premium.”
Last week, the SEC issued the suspension order on BDOLF.
BDO Unibank in end-January announced it entered into an agreement to sell a controlling stake in its publicly-listed subsidiary, BDOLF to a third party as part of the bank’s restructuring of its leasing business.
The restructuring of BDO’s leasing business is being undertaken to optimize the financial needs of clients in light of new accounting regulations covering lease transactions. IFRS 16, which took effect in January 2019, requires leases to be recognized on-balance sheet, similar to a loan facility. This makes lease transactions a less attractive option to corporate borrowers compared to the past.
Under the restructuring process, BDO has incorporated a new, privately-held finance company, BDO Finance Corp., (BDO Finance), to provide its customers “continuing access to lease products and services.”
“Additionally, BDO Finance will assume current lease transactions booked in BDOLF to provide continuity to existing clients. Meanwhile, clients who now find regular bank loans more attractive vis-í -vis leases can access BDO’s wide range of products and services,” BDO earlier said.
