SEC to probe Globe Asiatique's housing loan practices

MANILA, Philippines - The Securities and Exchange Commission (SEC) is conducting its own investigation into allegations Globe Asiatique Realty Holdings Corp. had committed fraud in its housing projects with the government-run Home Development Mutual Fund, a move that could derail the property firm’s plans to go public.

SEC associate commissioner Juanita Cueto said news reports alleging Globe Asiatique had falsified documents to take out loans from HDMF for buyers of its housing projects in Pampanga were alarming, prompting the corporate regulator to conduct its own investigation.

News reports alleged that the property developer stashed around P7 billion in housing loan proceeds by registering dead people or ineligible borrowers as HDMF, or Pag-IBIG, members.

“This is a new development which emerged after we processed its application for registration. And the report in the news merit our own investigation,” Cueto told The STAR.

As this developed, Globe Asiatique said yesterday it was putting on hold its planned initial public offering (IPO) which was supposed to run from Sept. 15 – 22, citing weak global market conditions. “Following the recent global financial crisis, investors have been expecting the market to return to its normal state. However, as a result of the continued stability of the world market coupled with the lack of sufficient investments, global economic stability is not expected soon,” the company said.

The company has also committed to update its audited financial statement which would take at least a couple of months to complete. It cited Rule 68 of the Securities Regulation Code which states that “at the time a registration is to become effective, the financial information therein must be as of a date within 135 days from effective date.”

Cueto, however, said the Commission would need to “assess the gravity of violations before even allowing them to offer their shares to the public,” as she underlined the SEC’s duty to protect the investing public.

The SEC approved Globe Asiatique’s IPO application in March this year. Just last week, the realty firm also secured the Philippine Stock Exchange’s nod to sell a total of 339.16 million shares, including an overallotment option of 168.7 million shares. The shares will be sold at a price ranging from P6.50 to P10 each to raise up to P3.4 billion.

Globe Asiatique tapped BDO Capital and Investments Corp. as lead underwriter and issue manager.

Cueto said while the SEC has not yet received any complaints against Globe Asiatique, the Corporation Finance Department has already written the property developer to confirm the veracity of reports that came out.

Globe Asiatique previously said proceeds from the IPO would be used to fund the construction of GA Sky Suites and Corporate Tower on Quezon Avenue – soon to rise as the tallest building along EDSA – and several residential subdivisions, as well as pay down bank loans.

The company, headed by businessman Delfin Lee, was established in November 1994 primarily to engage in the development of housing projects for low- to middle-income families.