SEC revokes Saniwares‘ permit to sell securities

The Securities and Exchange Commission has revoked Sanitary Wares Manufacturing Corp.’s permit to sell securities to the public for failure to comply with reportorial requirements despite repeated notices from the corporate watchdog.

On Feb. 2, 2005, Saniwares was declared insolvent by the Las Pinas Regional Trial Court following the petition for insolvency filed by the tilemaker.

Based on the SEC’s findings, Saniwares failed to submit all quarterly reports for fiscal year 2005, in violation of Rule 17 of the Securities Regulation Code.

"Despite the notices given, the company failed to submit the reports required and respond or explain to the commission why it should not be held liable for violation of the SRC. No representative of the company appeared in a scheduled hearing on Jan. 11, 2006 to explain why revocation of the firm’s registration and permit to sell securities to the public should not commence," the SEC’s corporation finance department (CFD) said.

"Considering that the company has been judicially declared insolvent and due process has been afforded it by virtue of previous notices and a hearing set for the particular purpose, it is evident that the essential requisites prior to the issuance of an order of revocation have been met," the CFD further said.

According to the CFD, the failure of the company or its representatives to appear on the said hearing is considered a waiver on its part to be heard with respect to the revocation proceedings.

Saniwares‚ filing of a petition for voluntary liquidation had been approved by the firm’s board of directors as early as November 2004, citing its balooning debts.

After 43 years of operations, Saniwares closed down its manufacturing plant in November 2004 due to ballooning losses and rising costs that have hobbled its ability to settle maturing debts and secure substantial funding needed to upgrade its plant.

In the nine months ending September 2004, Saniwares incurred operating losses of P89.5 million.

Saniwares‚ petition for insolvency with the court, however, was met with stiff opposition by the company’s minority shareholdings on grounds that the filing of such was done in bad faith and that the company had engaged in misrepresentation.

Minority shareholders claimed that the tile manufacturer’s move to cease operations was made to give preference to The American Standard Group, which owns approximately 67.51 percent of the total issued common stock and 100 percent of the total issued preferred shares of Saniwares.

They also claimed that Saniwares is not insolvent as its assets still exceed its liabilities. They alleged that Saniwares had deflated the value of their assets to make it appear they have more liabilities than assets.

Among the minority shareholders are Willy Tieng, William Tieng, Wilson Tieng, Daisy Tieng, G.D. Tan & Co., KLG International, and Solar Resources Inc.

Saniwares is an export producer/manufacturer of brass fittings on a pioneer status and as an expanding export producer of vitreous china sanitary wares with a registered capacity of 6,000 metric tons per year.

Among the company’s products include water closets, lavatories, urinals and bidets and bathrom accessories. Sanitary Wares also markets other sourced items like whirlpools, bathtubs and brass fittings.