SM Investments could get off the hook in non-disclosure case — SEC official

The complaint against SM Investments Corp. (SMIC) over the alleged non-disclosure of a court case involving its subsidiary may not hold water the said case was dismissed prior to SMIC’s filing of a registration statement or prospectus with the Securities and Exchange Commission, an SEC official said.

SMIC claimed that the cases involving its 93 percent-owned unit Manila Southcoast Development Corp.’s property in Batangas had already been dismissed by the regional trial court. The company, however, did not say when it was dismissed.

"Timing would be very critical. We are now checking the date of the order to find out whether SMIC violated our rules on disclosure. This is certainly a material information that should have been disclosed to the public but if the case had been dismissed way way before the filing of SMIC’s registration statement then there’s nothing to disclose," the SEC official said.

The Batangas regional trial court had dismissed the case due to forum shopping and lack of jurisdiction over the issue.

The complaint was filed by Domingo Villafranca and Nomer Del Mundo, who claimed ownership of Manila Southcoast’s Hacienda Looc, a 57.5-hectare seaside property in Nasugbu, Batangas. The property, valued at P12.36 billion, is SMIC’s fourth largest asset in terms of value.

The complainants also asked the SEC to stop the trading of SMIC shares, alleging the company misrepresented that Manila Southcoast holds clean land titles on the Batangas property.

SMIC said Manila Southcoast was granted a permit in November last year to develop the property for leisure and tourism activities. The property was acquired by the company from the government through a public bidding in 1994.

The complainants, however, are expected to appeal their case to the Supreme Court.

Citing the Securities Regulation Code, the complainants said the SEC may reject or revoke the effectivity of a registration statement if the issuer has made any false or misleading representation of material facts in any properties concerning the issuer.

The SEC approved last month SMIC’s registration statement which paved the way for the listing of the company’s shares last March 22.

The complainants said the undisclosed facts are material facts that "will materially affect the value and marketability of the shares of the SM Group."

In the nine months ending December 2004, SMIC posted a net income of P3.91 billion on revenues of P42.17 billion. Its assets stood at P111.89 billion while stockholders’ equity was P35.27 billion.

SMIC holds the SM Group of Henry Sy’s interests in tourism, department store operations, financial services, and real estate development.