The board of directors for Premiere Horizon Alliance [PHA 0.27 1.89%] [link] voted to stop its acquisition of SquidPay Technology Inc (SPTI), owned by Marvin Dela Cruz (MDC), as was planned under the Memorandum of Agreement signed between the previous PHA ownership group and the Marvin Dela Cruz ownership group.
The board said that the acquisition of SPTI was no longer “in the best interest of PHA and its shareholders” because SPTI was not a “viable business”.
The PHA board noted that the agreement permitted PHA and MDC to “discuss” how MDC would pay for the remaining P554 million due from the MDC investor group, but said that attempts to reach MDC over “the past several months” to negotiate valuations have been “unsuccessful”.
PHA said that it even sent “formal letters” to MDC, but still did not hear back.
PHA said that since it will no longer accept SPTI shares as payment, that the MDC investor group must settle the remaining amount in cash, and that it must do so by October 29, 2022.
PHA ended the disclosure talking about developments in its legacy pursuits in real estate and mining.
MB BOTTOM-LINE
This backdoor takeover was born ugly, and it’s going to die ugly, too.
Back when it was first announced, I called out the wishy-washy language that allowed Marvin Dela Cruz to satisfy his obligations with “cash and/or SPTI shares” (here, and here).
The deal was being branded as a SquidPay backdoor of PHA, but the agreement didn’t require PHA to acquire any of SquidPay, so it always felt as though there was a foundational disconnect between Marvin Dela Cruz and the previous PHA ownership group on where PHA was going and how it was going to get there.
Since then, I’ve received several private messages from insiders that said PHA’s old and new ownership groups were not cooperating, and that Marvin Dela Cruz was absent from important planning and governance meetings. This caused uncertainty within PHA’s ranks, and with PHA’s stakeholders.
Then we saw revelations that a member of Marvin Dela Cruz’s own “investor group”, Brandon Leong, had sued him for non-payment of a P100 million convertible loan, seeking a large chunk of Marvin’s PHA shares to satisfy the debt.
It looks like Marvin used this loan to pay for a big part of his downpayment for his PHA shares, and now Marvin can’t pay back the original loan to Brandon and PHA is no longer interested in receiving “unviable” SquidPay shares.
What an absolute mess. But wasn’t it this way from the beginning?
There were questions looming over SquidPay’s “viability” from the very start.
The agreement didn’t signal any certain outcomes, and it was unclear how ownership and control would proceed under the uncomfortably-long period that Marvin had to perfect his claim to the shares he bought.
Reminds me of an old saying: The best time to not accept janky SquidPay shares as payment for a debt was 20 years ago, the second best time is now.
I wonder if MDC and SquidPay will be able to make payment on that P900 million acquisition of a 60% stake in Phil Star Development Bank, the subsidiary of AbaCore [ABA 2.22]?
--