CENTURY ACQUA LIFESTYLE CORPORATION

Transcription

CENTURY ACQUA LIFESTYLE CORPORATION
(incorporated in the Republic of the Philippines)
Primary Offer and Sale of:
Type of Share
No of Shares
Shares per
Board Lot
No of Board
Lots
Price per Share
Price per Board
Lot
Preferred A
6,344
13
488
PHP
166,667
PHP 2,166,671
Preferred B
520
13
40
PHP
238,889
PHP 3,105,557
Preferred C
520
13
40
PHP
383,333
PHP 4,983,329
Preferred D
520
13
40
PHP
444,444
PHP 5,777,772
Total
7,904
608
The Offer Shares relates to Ownership of the Preferred Shares of Century Acqua Lifestyle Corporation which shall entitle the Preferred Shareholders to a 40% Net Room Rental Revenue; to use the condominium units owned by the Company in, and enjoy the facilities of, Acqua 6 Tower of Acqua Private Residences to be managed by Accor under
the Novotel Suites Manila Brand
The date of this Prospectus is 15 June 2015
THE PHILIPPINE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE AND
SHOULD BE REPORTED IMMEDIATELY TO THE PHILIPPINES SECURITIES AND EXCHANGE COMMISSION.
Century Acqua Lifestyle Corporation
21/F Pacific Star Building
Makati Avenue, Makati City,
Telephone Number: +63-2-793 5500
Corporate Website: www.novotelsuitesmanila.com/calc
This Prospectus relates to the offer and sale of an aggregate 7,904 Preferred A, Preferred B, Preferred C and
Preferred D Shares (collectively, the “Offer Shares”) of Century Acqua Lifestyle Corporation, a corporation
organized under Philippine law (the “Company” or the “Issuer”). The Offer Shares will comprise of (i)
6,344 Class A Preferred Shares (the “Preferred Class A Shares”); (ii) 520 Class B Preferred Shares (the “Preferred Class B Shares”); (iii) 520 Class C Preferred Shares (the “Preferred Class C Shares”); and (iv) 520
Class D Preferred Shares (the “Preferred Class D Shares”)
Pursuant to its Articles of Incorporation, the Company has an authorized capital stock of P 100,000,000.00
divided into (i) 94,164,560.00 Common Shares with a par value of P 1.00 per share; (ii) 6,344 Preferred
Class A Shares with a par value of P 10.00 per share ; (iii) 520 Preferred Class B Shares with a par value of
P 100.00 per share; (iv) 520 Preferred Class C Shares with a par value of P 1,000.00 per share; and (v) 520
Preferred Class D Shares with a par value of P 10,000.00 per share. Out of the Authorized Capital Stock,
25,000,000 Common Shares are outstanding as of the date of this Prospectus. The Offer Shares are the Preferred Class A, Preferred Class B, Preferred Class C and Preferred Class D Shares of the Company.
The Offer Shares will be offered at the following prices (i) up to ₱166,667 per Preferred Class A Share
equivalent to 488 board lots at an Offer Price of up to P2,166,671 per board lot; (ii) up to ₱238,889 per Preferred Class B Share equivalent to 40 board lots at an Offer Price of up to P3,105,557 per board lot; (iii) up
to ₱383,333 per Preferred Class C Share equivalent to 40 board lots at an Offer Price of up to P4,983,329 per
board lot; and (iv) up to ₱444,444 per Preferred Class D Share equivalent to 40 board lots at an Offer Price
of up to P5,777,772 per board lot (collectively, the “Offer Price”). The determination of the Offer Price is
further discussed on page 36of this Prospectus. A total of up to 6,344Preferred Class A Shares, 520 Preferred
Class B Shares, 520 Preferred Class C Shares and 520 Preferred Class D Shares will be outstanding after the
Offer.
The total proceeds to be raised by the Company from the sale of the Offer Shares will be approximately
₱1,612,001,768. The estimated net proceeds to be raised by the Company from the sale of the Offer Shares
(after deducting fees and expenses payable by the Company of approximately ₱216,474,510) will be approximately ₱1,395,527,258. The Company intends to use the net proceeds it receives from the Offer Shares to
pay Century Limitless Corporation (“CLC”) the purchase price for the 152 condominium units it acquired in
Aqua 6 Tower of the Acqua Private Residences, pay the operating expenses which include the general and
admin expenses, taxes and interest expense. For a more detailed discussion on the proceeds from the sale of
the Offer Shares and the Company’s proposed use of proceeds, please see “Use of Proceeds” beginning on
page 30 of this Prospectus.
Each holder of the Preferred Class A, Preferred Class B, Preferred Class C and Preferred Class D Shares will
be entitled to use the facilities of the 152 condominium units acquired by the Company from CLC, subject to
certain restrictions and limitations provided in this Prospectus. The holders of the Preferred Shares will also
be entitled to a share in the Net Room Rental Revenue of 40% over the 152 Condominium Units, payable
annually but will no longer be entitled to dividends. For a more thorough discussion on the benefits and
share in the Net Room Rental Revenue, please see “Preferred Shareholders’ Entitlements & Dividends” beginning on page 32 of this Prospectus.
The 152 condominium units of the Acqua 6 Tower is part of CLC’s Acqua Private Residences development,
a magnificent multi-tower master-planned development on a 2.4-hectare prime property, rising right on the
waterfront at a point where Mandaluyong City meets Makati City. It is composed of 6 towers – Niagara, Sutherland, Dettifoss, Livingstone, Iguazu and Acqua 6 Tower. The development has a view of the dazzling
i
Makati skyscrapers across the bridge. It is accessible via the Makati-Mandaluyong Bridge and is also connected to the Makati Central Business District via the newly constructed Estrella-Pantaleon Bridge. Please
see “The Acqua Private Residences” beginning on page 10 of this Prospectus.
The Acqua 6 Tower is the sixth building within the integrated urban residential development, which will
house 310 Hotel Suites and 149 branded residential units. Of the 310 Hotel Suites, 152 will be owned by the
Company while the remaining 158 units will remain with CLC. The 149 residential units will be sold by
CLC as retail units. The Acqua 6 Tower will be a dedicated hospitality project to be managed by Novotel
Suites, Manila. Please see discussion on the property under “The Acqua 6 Tower” beginning on page 11 of
this Prospectus. The Acqua 6 Tower will be fully financed by CLC’s credit facility from a reputable bank in
the Philippines.
The information contained in this Prospectus relating to the Company and its intended operations has been
supplied by the Company, unless otherwise stated herein. To the best of its knowledge and belief, the Company, which has taken reasonable care to ensure that such is the case, confirms that the information contained in this Prospectus relating to it and its intended operations is correct, and that there is no material
misstatement or omission of fact which would make any statement in this Prospectus misleading in any material respect and that the Company hereby accepts full and sole responsibility for the accuracy of the information contained in this Prospectus with respect to the same.
Unless otherwise indicated, all information in this Prospectus is as of the date of this Prospectus. Neither the
delivery of this Prospectus nor any sale made pursuant to this Prospectus shall, under any circumstances,
create any implication that the information contained herein is correct as of any date subsequent to the date
hereof or that there has been no change in the affairs of the Company since such date.
Before making an investment decision, investors should carefully consider the risks associated with an investment in the Offer Shares. These risks include:
•
Risks relating to the Company’s business;
•
Risks relating to the development of Acqua 6 Tower of the Acqua Private Residences
•
Risks relating to the Philippines;
•
Risks relating to the Offer and the Offer Shares and
•
Risks relating to certain statistical information in this Prospectus.
Please refer to the section entitled “Risk Factors” beginning on page 20 of this Prospectus, which, while not
intended to be an exhaustive enumeration of all risks, must be considered in connection with a purchase of
the Offer Shares.
The Offer Shares will be sold over-the-counter to the public and not through the facilities of the Philippine
Stock Exchange; neither will the shares be listed on the Philippine Stock Exchange. The Offer will not be
underwritten; hence no underwriting fees shall be incurred. The Offer Price will be determined by the Company based upon the finalization of the various agreements to be entered into by the Company. See “Determination of the Offer Price.”
The Offer Shares pertains to Preferred Shares that are not entitled to any dividends from the Company. The
Preferred Shares are entitled to a 40% Net Room Rental Revenue as fully discussed in the Prospectus.
An application has been made to the SEC to register the Offer Shares under the provisions of the Securities
Regulation Code of the Philippines (Republic Act (“R.A.”) No. 8799) (the “SRC”).
ii
No representation or warranty, express or implied, is made by the Company regarding the legality of an investment in the Offer Shares under any legal, investment or similar laws or regulations. The contents of this
Prospectus are not investment, legal or tax advice. Prospective investors should consult their own counsel,
accountant and other advisors as to legal, tax, business, financial and related aspects of a purchase of the Offer Shares. In making any investment decision regarding the Offer Shares, prospective investors must rely on
their own examination of the Company and the terms of the Offer, including the merits and risks involved.
Any reproduction or distribution of this Prospectus, in whole or in part, and any disclosure of its contents or
use of any information herein for any purpose other than considering an investment in the Offer Shares is
prohibited.
THE OFFER SHARES ARE BEING OFFERED IN THE PHILIPPINES ON THE BASIS OF THIS
PROSPECTUS ONLY. ANY DECISION TO PURCHASE THE OFFER SHARES IN THE PHILIPPINES MUST BE BASED ONLY ON THE INFORMATION CONTAINED HEREIN.
No person has been authorized to give any information or to make any representations other than those contained in this Prospectus and, if given or made, such information or representations must not be relied upon
as having been authorized by the Company. This Prospectus does not constitute an offer to sell or the solicitation of an offer to purchase any securities other than the Offer Shares or an offer to sell or the solicitation
of an offer to purchase such securities by any person in any circumstances in which such offer or solicitation
is unlawful. Neither the delivery of this Prospectus nor any sale of the Offer Shares offered hereby shall, under any circumstances, create any implication that there has been no change in the affairs of the Company
since the date hereof or that the information contained herein is correct as of any time subsequent to the date
hereof.
Market data used throughout this Prospectus has been obtained from market research, reports and studies,
publicly available information and industry publications. Industry publications generally state that the information that they contain has been obtained from sources believed to be reliable but that the accuracy and
completeness of that information is not guaranteed. Similarly, industry forecasts, market research and the
underlying economic assumptions relied upon therein, while believed to be reliable, have not been independently verified, and the Company makes no representation as to the accuracy of that information.
The operating information used throughout this Prospectus has been calculated by the Company on the basis
of certain assumptions made by it. As a result, this operating information may not be comparable to similar
operating information reported by other companies.
The Company reserves the right to withdraw the offer and sale of the Offer Shares at any time and reserves
the right to reject any commitment to subscribe for the Offer Shares in whole or in part and to allot to any
prospective purchaser less than the full amount of the Offer Shares sought by such purchaser. If the Offer is
withdrawn or discontinued, the Company shall subsequently notify the SEC.
Each offeree of the Offer Shares, by accepting delivery of this Prospectus, agrees to the foregoing.
Conventions which apply to this Prospectus
In this Prospectus, unless otherwise specified or the context otherwise requires, all references to the “Company” or the “Issuer” are to Century Acqua Lifestyle Corporation and all references to the “Parent Company” are to Century Limitless Corporation. All references to the “Philippines” are references to the Republic
of the Philippines. All references to the “Government” are to the national government of the Philippines. All
references to “Philippine Peso,” “Php,” “Pesos” and “₱” are to the lawful currency of the Philippines.
The items expressed in the Glossary of Terms may be defined otherwise by appropriate government agencies
or regulations from time to time, or by conventional or industry usage.
iv
Presentation of Financial Information
The Company’s financial statements are prepared based on its accounting policies, which are in accordance
with the Philippine Financial Reporting Standards (“PFRS”) issued by the Financial Reporting Standards
Council of the Philippines. PFRS include statements named PFRS, Philippine Accounting Standards and
v
Philippine Interpretations of International Financial Reporting
Interpretations Committee.
The financial information for the Company as of March 31, 2015 represents the accounts of the Company on
a consolidated basis. Unless otherwise stated, all financial information relating to the Company contained
herein is stated in accordance with PFRS.
Figures in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown in the
same item of information may vary, and figures which are totals may not be an arithmetic aggregate of their
components.
The Company’s fiscal year begins on 1 January and ends on 31 December of each year. SyCip Gorres Velayo & Co. (“SGV & Co.”), a member firm of Ernst & Young Global Limited, has audited and rendered an
unqualified audit report on the Company’s interim consolidated financial statements as of March 31, 2015.
Forward-Looking Statements
This Prospectus contains forward-looking statements that are, by their nature, subject to significant risks and
uncertainties. These forward-looking statements include, without limitation, statements relating to:
•
known and unknown risks,
•
uncertainties and other factors that may cause the Company’s actual results, performance or
achievements to be materially different from expected future results, and
•
performance or achievements expressed or implied by forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding the Company’s present and
future business strategies and the environment in which the Company will operate in the future. Important
factors that could cause some or all of the assumptions not to occur or cause actual results, performance or
achievements to differ materially from those in the forward-looking statements include, among other things:
•
the Company’s ability to successfully manage its intended activities,
•
the Company’s ability to successfully implement its current and future strategies, including customer
targeting, operations or other capital expenditures plans
•
the Company’s ability to successfully manage growth, anticipate and respond to demand for hotel/condotel services,
•
changes in the Philippine hospitality industry,
•
the Company’s ability to successfully manage its future business, financial condition, results of operations, and cash flow,
•
general political, social, and economic conditions and changes in the Philippines,
•
any future political instability in the Philippines,
v
•
any regional geopolitical dynamics involving the Philippines and/or its neighbors,
•
changes in interest rates, inflation rates, and the value of the Peso against the U.S. dollar and other
currencies,
•
changes in the laws, including tax laws, regulations, policies and licenses applicable to or affecting
the Company,
•
legal or regulatory proceedings in which the Company may become involved, and
•
uncontrollable events, such as war, civil unrest or acts of international or domestic terrorism, the
outbreak of contagious diseases, accidents and natural disasters.
Additional factors that could cause the Company’s actual results, performance or achievements to differ materially from forward-looking statements include, but are not limited to, those disclosed under “Risk Factors”
and elsewhere in this Prospectus. These forward-looking statements speak only as of the date of this Prospectus. The Company expressly disclaims any obligation or undertaking to release, publicly or otherwise,
any updates or revisions to any forward-looking statement contained herein to reflect any change in the
Company’s expectations with regard thereto or any change in events, conditions, assumptions or circumstances on which any statement is based.
This Prospectus includes statements regarding the Company’s expectations and projections for future operating performance and business prospects. The words “believe”, “plan”, “expect”, “anticipate”, “estimate”,
“project”, “intend”, “seek”, “target”, “aim”, “may”, “might”, “will”, “would”, “could”, and similar words
identify forward-looking statements. In addition, all statements other than statements of historical facts included in this Prospectus are forward-looking statements. Statements in this Prospectus as to the opinions,
beliefs and intentions of the Company accurately reflect in all material respects the opinions, beliefs and intentions of its management as to such matters as of the date of this Prospectus, although the Company gives
no assurance that such opinions or beliefs will prove to be correct or that such intentions will not change.
This Prospectus discloses, under the section “Risk Factors” and elsewhere, important factors that could cause
actual results to differ materially from the Company’s expectations. All subsequent written and oral forwardlooking statements attributable to the Company or persons acting on behalf of the Company are expressly
qualified in their entirety by the above cautionary statements.
The Company have exercised due diligence in ascertaining that all material representations contained in the
prospectus and any amendments and supplements are true and correct, and that no material information was
omitted, which was necessary in order to make the statements contained in said documents not misleading.
vi
TABLE OF CONTENTS
PAGE
GLOSSARY OF TERMS.................................................................................................................................. 2
SUMMARY ...................................................................................................................................................... 9
SUMMARY OF THE OFFER ........................................................................................................................ 14
SUMMARY FINANCIAL AND OPERATING INFORMATION................................................................ 18
RISK FACTORS ............................................................................................................................................. 20
RISKS RELATING TO THE COMPANY’S BUSINESS ............................................................................. 20
RISKS RELATING TO THE COMPLETION OF THE ACQUA 6 TOWER ............................................... 22
RISKS RELATING TO THE DEVELOPER ................................................................................................. 23
RISKS RELATING TO THE PHILIPPINES ................................................................................................. 24
RISKS RELATING TO THE OFFER AND THE OFFER SHARES ............................................................ 27
RISKS RELATING TO CERTAIN STATISTICAL INFORMATION IN THIS PROSPECTUS ................ 28
EXCHANGE RATES ..................................................................................................................................... 29
USE OF PROCEEDS ...................................................................................................................................... 30
PREFERRED SHAREHOLDERS’ENTITLEMENTS& DIVIDENDS ......................................................... 32
THE ACQUA 6 TOWER – NOVOTEL SUITES MANILA.......................................................................... 40
DETERMINATION OF THE OFFER PRICE ............................................................................................... 44
SELECTED FINANCIAL AND OPERATING INFORMATION ................................................................ 45
BUSINESS ...................................................................................................................................................... 49
INDUSTRY..................................................................................................................................................... 58
REGULATORY AND ENVIRONMENTAL MATTERS ............................................................................. 60
BOARD OF DIRECTORS AND SENIOR MANAGEMENT ....................................................................... 62
PRINCIPAL SHAREHOLDERS .................................................................................................................... 67
RELATED PARTY TRANSACTIONS ......................................................................................................... 70
DESCRIPTION OF THE SHARES ................................................................................................................ 71
PHILIPPINE TAXATION .............................................................................................................................. 79
PLAN OF DISTRIBUTION............................................................................................................................ 84
LEGAL MATTERS ........................................................................................................................................ 86
INDEPENDENT AUDITORS ........................................................................................................................ 87
INDEX TO AUDITED INTERIM FINANCIAL STATEMENTS…………………………………………F-1
1
GLOSSARY OF TERMS
In this Prospectus, unless the context otherwise requires, the following terms shall have the meanings set
forth below.
ACCOR
S & P Inc or the Hotel Consultant/Manager engaged by the Company to manage
and operate the 152 units of the Acqua 6 Tower under the Novotel Suites brand
ACCOR Advantage Plus is largest subscription loyalty program in Asia Pacific.
Accor Advantage Plus Members enjoy exclusive dining and accommodation benefits at over 500 AC(AAP)
COR Hotels and Resorts throughout the Asia Pacific Region
Acqua Private Resi- the multi-tower master planned development, consisting of six (6) buildings, on a
2.4-hectare prime property, rising along Pasig River in Coronado Street
dences
Acqua 6 Tower
the sixth (6th) Building within the Acqua Private Residences integrated urban
residential development, which will house 310 Hotel Suites, 152 of which will be
purchased by the Company from CLC and managed and operated by ACCOR
under the Novotel Suites brand
Additional Plan Bene- the Interval International Exchange Program affiliation and such other additional
benefits which the Company may provide its shareholders fits
Affiliate
any resort or hotel accredited with the Company or with ACCOR
All Suite Hotel and shall mean a hospitality business equipped for guests considering longer duration
of stay or residency, normally in excess of 7 nights. Rooms are equipped with
Service Apartment
small kitchenettes to facilitate in room meal preparation etc.
Annual Usage
titlements
Application
En- the entitlement of a Preferred Shareholder to use and occupy, for 28 nights per
year, the units owned by the Company in Acqua 6 Tower of the Acqua Private
Residences, for a more detailed discussion on this entitlement, please refer to the
discussion on page 32 of this Prospectus
the documents to purchase/subscribe to the Offer Shares
Articles of Incorpora- the Articles of Incorporation of the Company and any amendments thereto
tion
Assessment
any written notification by the Company to any Preferred Shareholder relative to
fees/dues payable
Balikbayans
Former Filipino citizens who have returned to the Philippines.
Banking Day or Busi- A day (except Saturdays, Sundays and holidays) on which commercial banks in
Makati City, Metro Manila, Philippines are open for business transactions
ness Day
2
BAR
Base Average Rate
BIR
Bureau of Internal Revenue
Board of Directors or the Board of Directors of the Company
Board
Branded Residences
Shall mean the residential portion of the building wherein the purchased residential unit owner shall benefit from ad-hoc services provided by the hotel operator.
BSP
Bangko Sentral ng Pilipinas, the central bank of the Philippines
By-Laws
the By-Laws of the Company
CAGR
compound annual growth rate
Cancellation Period The period within which a subscriber may rescind the subscription and receive a
refund of the subscription price net of the P 25,000.00 nonrefundable processing
or Cooling Off
and administration fees. The period may be exercised within 7 days only from the
signing of the Subscription Agreement or the full payment of the required deposit, whichever comes first. Beyond this period, no refund shall be allowed.
CBD
Central Business District
CCC
Century Communities Corporation
CCDC
Century City Development Corporation
Civil Code
Republic Act No. 386, also known as the Civil Code of the Philippines, as
amended
Class A Shares
The Preferred A Shares of the Company with a par value of P10.00
Class B Shares
The Preferred B Shares of the Company with a par value of P100.00
Class C Shares
The Preferred C Shares of the Company with a par value of P1,000.00
Class D Shares
The Preferred D Shares of the Company with a par value of P10,000.00
CLC
Century Limitless Corporation
Common Shares
common shares of the Company with a par value of P1.00 per share
3
Company or
or CALC
Issuer Century Acqua Lifestyle Corporation, a corporation incorporated in the Philippines
Congress
the Congress of the Philippines, which comprises the House of Representatives
and the Senate
CPGI
Century Properties Group, Inc., a publicly listed company in the Philippine Stock
Exchange
CPHLI
Century Properties Hotel & Leisure, Inc.
CPI
Century Properties, Inc.
CPMI
Century Properties Management, Inc.
DAR
Philippine Department of Agrarian Reform
DENR
Philippine Department of Environment and Natural Resources
Deluxe Room
A unit consisting of one master bedroom, one toilet & bath, kitchenette, dining
area and living area. Average size of the room is 46 sq.m.
Developer
CLC, the developer of the Acqua 6 Tower
Director(s)
the director(s) of the Company
EAPRC
East Asia Power Resources Corporation
EBITDA
net operating income after adding depreciation and amortization, cost of sharebased payments and foreign exchange gains (losses)
ECC
Environmental Compliance Certificate
EIA
Environmental Impact Assessment
Family
Parents or Spouse and children/wards over whom the Preferred shareholder exercises parental/legal guardianship
F&B
food and beverage
GFA
Gross floor area
4
the national government of the Republic of the Philippines
Government
Governmental
thority
Au- The Republic of the Philippines, any of its political subdivisions, or any branch,
department, agency or office thereof, or any Person exercising or entitled to exercise executive, legislative, judicial, regulatory or administrative functions thereof
Gross Margin
the Company’s gross profit divided by total revenue as described in the Financial
Statements included in this Prospectus
High Season
Shall mean those dates within a calendar year such as major local and international public holidays of other special occasions declared from time to time by
the Government
HLURB
Housing and Land Use Regulatory Board
Interval
Interval International, Inc.
IRRs
Implementing Rules and Regulations of the SRC, as amended
Lien
shall mean (a) a mortgage, charge, pledge, encumbrance, or other lien securing
any obligation of any person, (b) any arrangement under which money or claims
to, or the benefit of, a bank or other account may be applied, set off or made subject to a combination of accounts so as to effect discharge of any sum owed or
payable to any person or (c) any other type of preferential arrangement (including
any title transfer and retention arrangement) having a similar effect
LGU
Local Government Unit
Net Rental Room Total revenue from rentals of all rooms less total room cost of sales.
Revenue or NRRR
Novotel Suites Brand
Is Accor’s 4-stars international midscale brand for business & leisure travelers,
with hotels located in the heart of major international cities, business districts and
tourist destinations
NRRR PSM
Net rental room revenue per square meter
NSA
net saleable area
Offer
the offer and sale of the Offer Shares
Offer Price
up to P166,667.00 per Preferred A Share or P2,166,671.00 per board lot
up to P238,889.00 per Preferred B Share or P3,105,557.00per board lot
up to P383,333.00 per Preferred C Share or P4,983,329.00 per board lot
up to P444,444.00 per Preferred D Share orP5,777,772.00 per board lot
5
Offer Shares
the offer of:
6,344 Preferred A Shares
520 Preferred B Shares
520 Preferred C Shares
520 Preferred D Shares
OFW
Overseas Filipino Workers
PAS
Philippine Accounting Standards
Person
Individuals, juridical persons such as corporation, partnership, joint venture, unincorporated association, trust or other juridical entities, or any governmental
authority.
Pesos, Philippine Pe- the legal currency of the Republic of the Philippines
sos, ₱ and Philippine
currency
PEZA
Philippine Economic Zone Authority
PFRS
Philippine Financial Reporting Standards
Philippine
tion
Constitu- also known as the 1987 Constitution, the supreme law of the Republic of the
Philippines
Philippine
tion Code
Corpora- Batas PambansaBlg. 68, also known as the Corporation Code of the Philippines
Preferred Sharehold- the owner of the Preferred Class A, Preferred Class B, Preferred Class C and Preferred Class D shares
er/s
Principal Shareholder Century Limitless Corporation or CLC
Premier Room
A unit consisting of one master bedroom, one toilet & bath, one powder room,
kitchenette, dining area and living area. Average unit size is 87 sq.m.
Processing and Ad- The one-time non-refundable fee of P 25,000.00 paid by the purchaser upon
submitting a signed Option Agreement, to answer for the processing expenses
ministration Fee
and administration fees.
Property Manager
S & P Inc or the Hotel Consultant/Manager engaged by the Company to manage
and operate the 152 units of the Acqua 6 Tower under the Novotel Suites brand
Prospectus
This Prospectus together with all its annexes, appendices and amendments, if any
6
P&L
Profit and Loss Statement
PSA
Philippine Standards on Auditing
PSE
The Philippine Stock Exchange, Inc.
R.A.
Republic Act, which refers to a statute enacted by the Senate or the House of
Representatives
SEC
the Philippine Securities and Exchange Commission
SGV & Co
SyCip Gorres Velayo & Co., the Company’s Independent Auditor
Shoulder Season
Shall mean those dates within a calendar year such as minor local and international public holidays, events, other special occasions declared from time to time
by the Government
Space Available Res- Shall mean that any booking or reservation is strictly subject to the room type or
category being available for booking and not occupied by any other guest during
ervation
all or part of the requested booking period.
sq.m.
square meter(s)
SRC
R.A. No. 8799, also known as the Securities Regulation Code of the Philippines
Studio Room or Stan- A unit consisting of an area for bed, one toilet & bath, mini bar, dining area/work
table, and space for sofa bed and coffee table with an average unit size of 30
dard Room
sq.m.
Superior Room
A unit consisting of one master bedroom, one toilet & bath, one powder room,
kitchenette, dining area and living area with an average unit size is 67 sq.m.
Tax Code
The Philippine National Internal Revenue Code of 1997, as amended, and its implementing rules and regulations as may be in effect from time to time
Terms and Conditions The terms and conditions of the issuance of the Preferred Shares as set forth in
the Subscription Agreement
Turn-over Date
Shall mean the date that the building is officially handed over to investors/owners
and is freely ready for residency of occupancy, estimated to be in during the third
quarter of 2019.
Usage Fee
Represents as no more than 30% of the BAR of each room category. For example, if a Studio BAR is Peso 6,000/night, then the usage fee would be Peso
1,800/night
7
Weekly Use Periods
Shall mean the period of investor’s own use of the specific unit relating to the
category of preferred share invested.
Use Period Reserva- Shall mean the booking procedure for preferred shareholding to avail of their Use
Period
tion
Use Year
Shall mean the year in which the Weekly Use Period is applicable
VAT
Value-added Tax
8
SUMMARY
The following summary is qualified in its entirety by, and is subject to, the more detailed information presented in this Prospectus, including the Company’s audited interim financial statements and related notes
included elsewhere in this Prospectus. Capitalized terms not defined in this summary are defined in the
“Glossary of Terms”, “Risk Factors”, “Business” or elsewhere in this Prospectus.
OVERVIEW
The Company was registered with the SEC on November 6, 2014, with an authorized capital stock of
P100,000,000 divided i) 94,164,560.00 Common Shares with a par value of P 1.00 per share; (ii) 6,344 Class
Preferred A Shares with a par value of P 10.00 per share ; (iii) 520 Preferred Class B Shares with a par value
of P 100.00 per share; (iv) 520 Preferred Class C Shares with a par value of P 1,000.00 per share; and (v)
520 Preferred Class D Shares with a par value of P 10,000.00 per share. As of the date of this Prospectus,
25,000,000 Common Shares was subscribed and P7,972,906 was paid up.
The Company is a wholly owned subsidiary of CLC which in turn is a wholly owned subsidiary of CPGI.
The Company, through its founding principals, harnesses more than 28 years of expertise in the real estate
industry.
On November 17, 2014, the Board of Directors and stockholders of the Company approved the offer of its
Preferred Shares to the public in order to raise funds to fully pay for the 152 condominium units in Acqua 6
Tower of Acqua Private Residences it acquired from CLC and all expenses related to the sale of 152 units.
The primary purpose of the Corporation is to acquire by purchase, own, hold, manage, administer, lease or
operate the 152 units of the Acqua 6 Tower of Acqua Private Residences for the benefit of its shareholders.
The Company’s parent and principal shareholder, CLC, was incorporated on July 9, 2008, it focuses on
developing high-quality, affordable residential projects. Projects under CLC cater to first-time home buyers,
start-up families, retirees seeking safe, secure, and convenient homes within close proximity of quality
commercial facilities.
In 2008, observing the demand for housing in the affordable market, CLC, a subsidiary of CPGI, expanded
its product line into providing condominiums for the affordable to middle- income segment of the market. It
launched its first project, Azure Urban Resort Residences in December 2009 with the aim of providing
housing for young couples, families, OFWs and other consumers seeking an urban beach resort lifestyle.
In 2011, CLC launched Acqua Private Residences, a residential community in Mandaluyong City. At
completion, the project will have six towers with over 3,000 units. At the end of 2013, 5 of the 6 buildings
have already been launched and are in various stages of construction. These are Niagara, Sutherland,
Dettifoss, Livingstone interior design by MISSONIHOME, and Iguazu by Yoo inspired by Starck.
In 2012, CLC launched its first project in Quezon City called The Residences at Commonwealth by
Century, which will cater to the affordable market. The community will have eight mid-rise towers, with
over 2,900 units.
Century Properties Group, Inc.
CPGI is one of the leading real estate companies in the Philippines, wherein its founding principals have
over 28 years of experience. According to Colliers International, it ranked third in terms of Metro Manila
9
residential market share by value of units sold for the full year ended December 31, 2013. CPGI is primarily
engaged in the development, marketing, and sale of mid- and high-rise condominiums, commercial leasing
and property management.
Currently, CPGI has five wholly-owned subsidiaries namely Century City Development Corporation,
Century Limitless Corporation, Century Communities Corporation, Century Properties Management, Inc.
and Century Properties Hotel and Leisure, I nc. (collectively known as the “Subsidiaries”). Through its
Subsidiaries and associate, CPGI develops markets and sells residential, office, medical and retail properties
in the Philippines as well as manage residential and commercial properties in the Philippines.
The roster of noteworthy developments include the Gramercy and Knightsbridge Residences in Century
City, Makati City. CPGI also formally launched the Century City Mall in March 2014, its initial foray into
retail development.
Currently, CPGI is developing five master-planned communities that are expected to have 31
condominiums and commercial buildings and 934 single detached homes, with a total expected GFA of
1,669,325 sq.m. These five master-planned communities are: Century City, Acqua Private Residences,
Azure Urban Resort Residences, Commonwealth and Canyon Ranch.
CPGI’s land bank for future development consists of properties in Pampanga, Quezon City and Batangas
that cover a site area of 2,000,970 sq.m.
Century Properties Hotel and Leisure, Inc.
CPHLI is a wholly owned subsidiary of CPGI, which was incorporated on March 27, 2014. The primary
purpose is to own, operate, conduct and engage in the hotel business and related businesses.
CPHLI will be appointed by CALC to act as the administrator and asset manager of the 152 condominium
units upon its turnover. In this role, CPHLI will assist the Preferred Shareholders in all aspects of
communications, management of usage rights and liaison with the property manager.
The Acqua Private Residences
A multi-tower master-planned development on a 2.4 hectare property at the border of Makati City and
Mandaluyong City, Acqua Private Residences has a tropical rainforest-infused design that attempts to
combine nature with urban living. The towers are each expected to have views of the Makati City skyline.
Acqua Private Residences’ amenities are expected to include a lounge area, juice bar and café, spa, climbing
wall, boxing studio, tennis courts and what is believed will be the first riverwalk promenade in the
Philippines which will feature restaurants, bars and designer stores. The project was launched in February
2011. Acqua Private Residences is targeted at consumers in the middle-income segment and is expected to
consist of over 3,000 units with a total GFA of 229,996 sq.m. upon completion. The Pasig River separates
Acqua Private Residences from Makati City and the property will be accessible from Makati City via a
newly-constructed bridge across the Pasig River.
Acqua Private Residences will have 5 residential towers, 1 hotel and residential tower and an amenity
structure - The Pebble, which will be facing the vibrant city of Makati. For the first tower, the Niagara, is
scheduled for completion during the first quarter of January 2015. The Sutherland, is also scheduled to
complete during 2015. The third tower, Dettifoss, the fourth tower Livingstone - interior designed by
Missoni Home, and the he fifth tower, the Iguazu are scheduled to be completed from 2016 to 2018.
The Acqua 6, is the sixth tower which is the proposed hotel and residential development, is already on the
planning stage. As for the amenity building, the Pebble, construction commenced on July 2014. The
completion of the whole development is expected by the end of third quarter of 2019.
10
The Acqua 6 Tower
The Acqua 6 Tower development will be a unique phase of the overall Acqua Private Residences
development that will focus on hospitality. In total, the 40-story building will comprise of approximately 460
units and a GFA of more than 30,000 sq.m.
The Acqua 6 Tower is due to commence construction on the first half of 2015 and is expected to take
approximately 48 months to complete.
The Acqua 6 Tower will be divided into 2 distinct areas. There are approximately 149 units of Branded
Residences and 310 Hotel Suites, 152 of which will be owned by the Company and 158 units retained by the
Developer. The Developer retained units and the units owned by the Company will be operated as an All
Suite Hotel and Serviced Apartment, to be managed by Accor, the largest Hotel Group in the world, under
the Novotel Suites Brand.
The total Acqua 6 Tower development is focused on delivering first class hospitality services to all
stakeholders and be distributed globally, thus delivering a truly international and globally recognized project
managed to international hotel standards.
Residents, shareholders and guests will be able to enjoy, a first class international restaurant, executive club
lounge, residents lounge, fitness and wellness center, executive meeting facilities, and iconic pool, all
supported by full hotel butler and concierge services.
Competitive Strengths
The Company believes that the following are its key business strengths:
• The first fully integrated and internationally branded 4 star hospitality project in the Philippines
11
•
International branded and global distribution through ACCOR.
•
Lack of new branded hotel and service apartments in Manila to meet the growing domestic and international tourism demands.
•
Affordable investment
•
Annual usage entitlement that meets the Filipino OFW home leave schedules.
Key Strategies
The Company has developed the following principal plans and strategies to grow its business, earnings and
profitability, and to maintain a sound financial condition and competitive edge within the industry:
•
Appointment of a globally recognized hotel operator to brand and manage the business
•
Access to Accor’s “Global Distribution” network to drive occupancy and room yield
Risks of Investing
Before making an investment decision, investors should carefully consider the risks associated with an investment in the Offer Shares. These risks include:
•
risks relating to the Company’s business
•
risks relating to the completion of the Acqua 6 Tower
•
risks relating to the Developer
•
risks relating to the Philippines
•
risks relating to the Offer and the Offer Shares
•
risks relating to certain statistical information in this Prospectus.
Please refer to the section entitled “Risk Factors” which, while not intended to be an exhaustive enumeration
of all risks, must be considered in connection with a purchase of Offer Shares.
Corporate Information
The Company is a Philippine corporation with its principal offices located at 21/F Pacific Star Building, Makati Avenue, Makati City. The Company’s telephone number is +63-2-793-55-00 and its fax number is +632-8936086. Its corporate website is www.century-properties.com or www.acqua.com.ph the information on
the Company’s website is not incorporated by reference into, and does not constitute part of this Prospectus.
12
Investor Relations Office and Compliance Office
The Investor Relations Office is tasked with (a) the creation and implementation of an investor relations program that reaches out to all shareholders and informs them of corporate activities and (b) the formulation of a
clear policy for accurately, effectively and sufficiently communicating and relating relevant information to
the Company’s stakeholders as well as to the broader investor community.
Rhoel Alberto Nollido the Company’s designated Investor Relations Officer (“IRO”) and Treasurer. The
IRO will be responsible for ensuring that the Company’s shareholders have timely and uniform access to
official announcements, disclosures and market-sensitive information relating to the Company. As the Company’s officially designated spokesperson, the IRO will be responsible for receiving and responding to investor and shareholder queries. In addition, the IRO will oversee most aspects of the Company’s shareholder
meetings, press conferences, investor briefings, management of the investor relations portion of the Company’s website and the preparation of its annual reports. The IRO will also be responsible for conveying information such as the Company’s policy on corporate governance and corporate social responsibility, as well as
other qualitative aspects of the Company’s operations and performance.
Atty. Isabelita Ching-Sales currently serves as the Company’s Compliance Officer to ensure that the Company complies with, and files on a timely basis, all required disclosures and continuing requirements of the
SEC.
The Company’s Investor Relations Office is located at 21/F Pacific Star Building, Makati Avenue Makati
City.
13
SUMMARY OF THE OFFER
Issuer
The Offer
Century Acqua Lifestyle Corporation, a corporation organized under Philippine law
Offer of an aggregate 7,904 Preferred Shares of the Company, as follows:
6,344
520
520
520
-
Class A Preferred Shares
Class B Preferred Shares
Class C Preferred Shares
Class D Preferred Shares
The Preferred Shares of the Company:
Offer Shares
6,344
520
520
520
-
Class of Preferred Share
Price per Share
P166,667
P238,889
P383,333
P444,444
Offer Price
Offer Period
The Offer Period shall commence upon approval by the SEC
of the Registration Statement and the issuance of the Permit
to Sell.
Eligible Investors
The Offer Shares may be purchased by any natural person of
legal age residing in the Philippines or abroad, regardless of
nationality, or any corporation, association, partnership, trust
account, fund or entity, regardless of nationality, subject to
the restrictions of other countries or jurisdictions on the sale
of securities and the Company’s right to reject an application
or reduce the number of Offer Shares applied for subscription
or purchase if the same will cause the Company to be in
breach of the Philippine ownership requirements under relevant Philippine laws.
Restriction on Ownership
There are currently no ownership restrictions with respect to
the Offer Shares, subject only to the Company’s right to reject an application or reduce the number of Offer Shares subscribed by an applicant
14
Restrictions on Disposal and Lock-up Requirement
A Preferred Shareholder may not sell, transfer or otherwise
dispose of their shares until the same has been fully paid and
is subject to the right of first refusal of the Common Shareholder. The Preferred Shareholder is also subject to a lock-up
of at least 6 months, from the date of full payment of their
shares, and completion of the development The Preferred
Shareholder may not sell or transfer their shares for less than
a multiple of 13 shares of each class of Preferred Shares.
Use of Proceeds
The Company intends to use the net proceeds from the Offer
to pay for the 152 condominium units of Acqua 6 Tower purchased from CLC. See “Use of Proceeds” on page 30 of this
Prospectus for details of how the total net proceeds are expected to be applied.
Minimum Subscription
Each application must be for a minimum of 13 Offer Shares
of the same class of Preferred Shares. An application may be
made for different classes of Preferred Shares provided that it
is made in multiples of 13 Offer Shares per class. An application for multiples of any other number of the Offer Shares
per class may be rejected or adjusted to conform with the required multiple, at the Company’s discretion.
Preferred Shareholders’ Entitlements
See “Preferred Shareholders’ Entitlements” beginning on
page 32 of this Prospectus for more details.
Cancellation of Subscription
A subscriber of the Offer Shares may cancel his subscription
within the Cancellation Period. He shall receive a refund of
all amounts paid except for the amount of P 25,000
representing the nonrefundable processing and administration
fee. Beyond the Cancellation Period or Cooling Off period,
no cancellation or refund shall be allowed.
Registration of Foreign Investments
The BSP requires that investments in shares of stock funded
by inward remittance of foreign currency be registered with
the BSP only if the foreign exchange needed to service capital repatriation or dividend remittance will be sourced from
the Philippine banking system. The registration with the BSP
of all foreign investments in the Offer Shares shall be the responsibility of the foreign investor. See “Philippine Foreign
Exchange and Foreign Ownership Controls” beginning on
Tax Considerations
See “Philippine Taxation” beginning on page 79 of this Prospectus for further information on the Philippine tax consequences of the purchase, ownership and disposal of the Offer
Shares.
15
Procedure for Application for the Offer
The company will pre-screen the prospective investor. The
pre-qualification process shall be done by matching an investor’s personal circumstance vis-à-vis the Company criteria,
which is initially done prior to invitation to attend the presentation after which formal compliant application forms will be
required
Payment Terms for the Offer
Investors may pay their subscription for the Offer Shares in
full outright.
Investors will be offered an interest-free amortization plan of
52 months after deduction of the “Initial Deposit”, equivalent
to 2 months’ amortization payments
The amortization term will be based on 80% of purchase
price and the balance of 20% shall be fully paid at the
estimated “Turnover Date” of September 2019, less the date
of issuance of reservation fee. Payments are to be fully paid
by “Turnover Date”. Amortization term will assume a
declining balance mechanism.
The certificates of shares shall be issued within sixty (60)
days from the date of full payment of the same.
See “Plan of Distribution” beginning on page 84 of this Prospectus for further information
Acceptance or Rejection of Applications
for the Offer
Application forms are subject to confirmation and final approval of the Company. The Company reserves the right to
accept, reject or scale down the number and amount of Offer
Shares covered by any application. Application forms which
do not comply with the terms of the Offer will be automatically rejected.
Expected Timetable
The timetable of the Offer is expected to be as follows:
The commencement of the Offer of the Shares is expected to
be on June 16, 2015
The commencement of the construction of Acqua 6 Tower of
the Acqua Private Residences is expected to be in second half
of 2015.
The completion and launch of the Acqua 6 Tower -Novotel
Suites Manila is expected to be on September of 2019
The dates included above are subject to the approval of the
SEC, market and other conditions, and may be changed.
16
Risks of Investing
Before making an investment decision, prospective investors
should carefully consider the risks associated with an investment in the Offer Shares. Certain of these risks are discussed
in the section entitled “Risk Factors” and include: risks relating to the Company’s business, risks relating to the completion of the Acqua 6 Tower, risks relating to the Developer,
risks relating to the Philippines, risks relating to the Offer and
the Offer Shares and risks relating to certain statistical information in this Prospectus.
17
SUMMARY FINANCIAL AND OPERATING INFORMATION
The following tables set forth the summary financial information for the Company and should be read in
conjunction with the independent auditors’ reports and the Company’s audited interim financial statements,
including the notes thereto, included elsewhere in this Prospectus, and the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations. ”The summary financial information as of March 31, 2015 was derived from the Company’s audited interim financial statements, which
was prepared in accordance with PFRS and was audited by SGV & Co. in accordance with the Philippine
Standards on Auditing (“PSA”). The summary consolidated financial information below is not necessarily
indicative of the results of future operations.
STATEMENT OF COMPREHENSIVE INCOME
REVENUE
Interest income
3,854
PRE-OPERATING EXPENSES
Filing fees
40,753
Taxes and licenses
40,691
Professional fees
50,000
Others
3,000
134,444
130,590
LOSS BEFORE INCOME TAX
771
PROVISION FOR INCOME TAX
NET PRE-OPERATING LOSS
131,361
–
OTHER COMPREHENSIVE INCOME
131,361
TOTAL COMPREHENSIVE LOSS
18
BALANCE SHEET
ASSET
Current Asset
Cash
6,288,789
LIABILITY AND EQUITY
Current liability
Accrued expenses
123,661
Equity
Capital stock
7,972,906
Deficit
(1,807,778)
Total Equity
6,165,128
6,288,789
STATEMENTS OF CASH FLOWS
CASH FLOW FROM PRE-OPERATINGACTIVITIES
Net pre-operating loss
(131,361)
Adjustment for interest income
(3,854)
Operating loss before working capital changes
(135,215)
Increase in accrued expenses
50,000
Net cash used in operations
(85,215)
Interest received
3,854
Net cash used in pre-operating activities
(81,361)
CASH FLOW FROM FINANCINGACTIVITY
Collection of subscription receivable
80,944
(417)
NET DECREASE IN CASH
CASH AT BEGINNING OF PERIOD
6,289,206
CASH AT END OF PERIOD
6,288,789
19
RISK FACTORS
The price of securities can and does fluctuate, and any individual security is likely to experience upward or
downward movements and may even become valueless. There is an inherent risk that losses may be incurred
rather than profit made as a result of buying and selling securities. Past performance is not indicative of
future performance and results and there may be a large difference between the buying price and the selling
price of a security. There are also additional risks of losing money when securities are bought from smaller
companies. Although shares tied up to a real property is generally not a speculative security and therefore
usually not subject to the fluctuation of share prices, an investment in the kind of Offer Shares being offered
by the Company does involve a number of risks.
Investors should carefully consider all the information contained in this Prospectus, including the risk
factors described below, before deciding to invest in the Offer Shares offered herein. The occurrence of any
of the following events, or other events not currently anticipated, could have a material adverse effect on the
Company and/or on the Company’s operation of Acqua 6 Tower acquired units and cause the value of the
Offer Shares to decline. All or part of an investment in the Offer Shares could be lost.
The means by which the Company intends to address the risk factors discussed herein are principally
presented under the captions “Business,” “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” and “Board of Directors and Senior Management” of this Prospectus. This risk
factor discussion does not purport to disclose all of the risks and other significant aspects of investing in the
Offer Shares. Investors should undertake independent research and study on the concept of the Offer Share
and the risks involved in investing and may request information on the securities being offered and the Issuer
from the SEC which are available to the public. Investors should seek professional advice regarding any
aspect of the securities such as the nature of risks involved in the purchase of a Preferred Share, which are
not publicly traded on an organized stock exchange so that a market valuation is not readily available. The
subsequent sale or transfer of the Preferred Share will be governed by contractual negotiations rather than
by market forces.
RISKS RELATING TO THE COMPANY’S BUSINESS
The Company’s operating results may significantly fluctuate from period to period due to competition and
other factors affecting the hotel market.
There is a risk that the Company’s operating results may fluctuate significantly due to competition from existing hotels and service apartments conducting similar business in Metro Manila. Competition will come
generally in the competitiveness of the room rates, the amenities offered and the accessibility of the venue.
As set out on pages 58 and 59 the hotel market in the Philippines in general and in particular Manila is in an
exceptional growth phase. However we can expect more than 6,000 new rooms to open in the market over
the next 3 years. Most of this new supply is found in the Manila Bay and Bonifacio Global City area and is
not expected to affect the Makati and Rockwell areas. In fact these areas will experience a decline in branded
supply with a number of hotel closures in 2014 and 2015.
Political risk is a large factor, evidenced by the current travel ban for Chinese visitors, already effecting
arrivals. We must be prudent and aware that any other such incidents of terrorism across the globe will no
doubt have a detrimental effect to the target growth of 10 Million arrival by 2018.
Global business travel and tourism growth can also be affected by poor infrastructure and it is critical that the
continued initiatives to improve the airports, roads and other transportation be sustained.
20
On a positive note, the growth in domestic travel continues with a CAGR of more than 20% expected on
2014 and beyond with more 44 Million domestic travelers in the market today. The Acqua 6 Tower business
mix will capture a significant percentage of domestic travelers and the very strong OFW inbound market.
The factors identified above and other risks discussed in this section may affect the Company’s operating
results from time to time.
Some of these factors are beyond the Company’s control. The Company may not be able to meet its target
growth due to restraining factors concerning corporate competencies, competition, global economies, and
market and customer requirements.
The Company believes its mother company CLC, as well as CPGI, has strategically positioned itself at the
upper end of each of the three residential segments it caters to, namely, affordable, middle income, and luxury markets. Furthermore, in order to manage these risks, the Company shall continuously adopt conservative policies to protect its operations and finances.
The Company is entirely dependent on one property for all of it cash flow.
Since the 152 condominium units in the Acqua 6 Tower will be the Company’s sole operating property, the
Company is subject to greater risk than other companies engaged in leasing with multiple operating
properties. The Company is more exposed to local economic and competitive conditions, natural disasters
and declines in the number of visitors. Any of these factors could adversely affect the Company’s business,
financial condition and results of operations.
To mitigate this risk, the Company plans to employ stronger marketing approach. . Furthermore, the Company
will strive to maintain the design and quality of its Units and is will focus on being customer-centric.
The Company’s business is sensitive to the willingness or ability of visitors to travel to the Philippines.
Acts of terrorism, crime, regional political events, natural disasters, outbreaks of epidemics or fears concerning such acts or outbreaks could cause severe disruptions in travel and reduce the number of visitors
to the Company’s facilities.
The strength and profitability of the Company’s business depends on the willingness and ability of visitors to
travel to the Philippines. Acts of terrorism, criminal activity or regional political events could create a perception that the Philippines is an unsafe place to visit. Disagreements between the Philippines and other
Asian countries have arisen, such as the dispute between China and the Philippines over the Scarborough
Shoal. See “Risks Relating to the Philippines—Territorial disputes with China and a number of Southeast
Asian countries may disrupt the Philippine economy and business environment.” Such occurrences could
have a negative impact on travel and tourism in the Philippines. Natural disasters such as floods, typhoons,
prolonged heavy rains and earthquakes, among others, could also have a negative impact on travel to the
Philippines. Furthermore, outbreaks of infectious diseases such as swine flu, dengue fever, Severe Acute
Respiratory Syndrome (commonly known as SARS) or avian influenza (commonly known as the bird flu), or
fears concerning such outbreaks, could discourage potential customers from travelling and patronizing the
Company’s resorts. It is possible that the new form of bird flu discovered in China in 2013, known as H7N9,
should it spread further in China or to neighboring countries, could discourage international travel in Asia,
including leisure travel to the Philippines. The Company cannot predict the extent to which disruptions in
travel as a result of any acts of terrorism, crime, regional political events, outbreak of hostilities or escalation
of war or outbreaks of infectious diseases would adversely affect the Company’s business, financial condition, results of operations and cash flows. Any extended period of disruption or decline in travel to the Philippines could have a material and adverse effect on the Company’s operations.
Any deterioration in the Company’s relations with ACCOR could materially and adversely affect the
Company’s operations.
The Company’s success will depend on the ability of ACCOR to successfully manage the Acqua 6 Tower
under the Novotel Suites Manila brand. Any deterioration in the relationship between the Company and
21
ACCOR may materially affect the management of the units owned by the Company in Acqua 6 Tower. In
the event that such disagreement leads ACCOR to terminate its contract with the Company to manage and
operate the Acqua 6 Tower, the same could have a material and adverse effect on the Company’s financial
condition and results of operations.
The Company has prudently selected ACCOR along with its network of accredited third-party contractors,
and it shall monitor ACCOR’s management of the Acqua 6 Tower. The Company shall likewise religiously
comply with its obligations and warranties under its Agreement with ACCOR to avoid conflicts.
The Company may, from time to time, be involved in legal and other proceedings arising out of its operations.
The Company may, from time to time, be involved in disputes with its employees and various parties involved in its operations, including contractual disputes with customers or suppliers, labor disputes with
workers or be exposed to damage or personal liability claims. Regardless of the outcome, these disputes may
lead to legal or other proceedings and may result in substantial costs, and the diversion of resources and
management’s attention. The Company may also have disagreements with regulatory bodies in the course of
its operations, which may subject it to administrative proceedings and unfavorable decisions that result in
penalties. In such cases, the Company’s business, financial condition, results of operations and cash flows
could be materially and adversely affected. Thus, the company shall properly assess the risks and possible
solutions to eventually settle disputes.
RISKS RELATING TO THE COMPLETION OF THE ACQUA 6 TOWER
Periodic refurbishment of the 152 Acqua 6 Units will depend upon the adequacy of the annual
contributions which have been allocated to the Reserve Fund by the Property Manager from gross rental
revenues.
In the event that essential refurbishment to some or all of the 152 Acqua 6 Units becomes necessary over
time but there are insufficient funds held in the Reserve Funding account, then in order to carry out such
works of refurbishment which may be necessary in order to continue to meet the Operators’ applicable brand
standards, then the Property Manager may have to calculate the shortfall in reserve funding and raise a
Special Assessment on all Shareholders in order to meet the anticipated refurbishment costs.
The construction and fit-out of the Acqua 6 Tower may not be completed by the Developer on time or at
all.
The construction and fit-out of large scale properties such as the Acqua 6 Tower requires various contracts
and negotiations for the construction, design, fit out and other aspects of the projects, such as various
supply, finishing, designing and other agreement. There can be no assurance that the Developer will be able
to enter into definitive contracts with contractors with sufficient skill, financial strength and experience on
commercially reasonable terms. The Developer’s ability to enter into such commercial arrangements may
depend on the availability of qualified contractors, subcontractors and suppliers, in addition to receipt of all
necessary government approvals, the final design and development plans, the availability of financing on
terms acceptable to it and prevailing market conditions, among other variables. The Developer may not be
able to obtain guaranteed maximum price or fixed contract price terms on such contracts for construction or
fit-out of the projects, which could cause the Developer to bear greater risks of cost overruns and delays.
Even if the Developer is able to obtain maximum price or fixed price contracts, there is no guarantee that
parties with whom the Developer enters into these contracts will comply with the terms of such contracts. If
the pricing terms under any construction or fit-out contracts were to change due to market conditions or other
circumstances, the Developer may exceed projected and budgeted costs, which in turn could impact its
ability to finance or complete the development of the Acqua 6 Tower. If it is unable to enter into
construction or fit-out contracts on terms satisfactory to it, the Developer may not be able to complete
construction or fit-out of the Acqua 6 Tower, which in turn would cause a material adverse effect on the
22
Company’s business and prospects, financial conditions, results of operations, cash flows and its ability to
meet its obligations to the Preferred Shareholders.
The Company shall prudently monitor the development of each stage of the project, from project inception,
up to project turnover, to quickly address possible construction and completion risks. Moreover, in the event
that the Acqua 6 Tower/Novotel Suites Manila of the Acqua Private Residences development project for
which the Subject Shares are sold is not completed as disclosed in the offering documents, the Company
shall refund all investments of the Subscriber within ten (10) days from receipt by the Company of the written demand from the Subscriber.
The Acqua 6 Tower Novotel Suites Manila may not be financially successful, and ACCOR may
experience difficulty in managing the hotel.
Even if the Developer is able to complete and open as planned Acqua 6 Tower, some or all of their
components may still not be financially successful venture or generate the cash flows that the Company
anticipates. The Novotel Suites Manila may also not attract the level of visitation that it is seeking.
The Company shall prudently monitor the development of each stage of the project to quickly address this
risk.
The Company is dependent on the performance, reputation and integrity of the third parties with whom
the Company engages in business activities.
The performance, reputation and integrity of the third parties with whom the Company engages in business
activities, such as the hotel and property manager, are important to the Company’s reputation and ability to
successfully operate. In particular, the Company’s business depends upon the performance and reputation of
the hotel manager, ACCOR. Although the Company endeavors, through contractual protections and
otherwise, to ensure that they comply with expected standards of performance and integrity, there can be no
assurance that these standards will be maintained. There can also be no assurance that the Company’s
contract with ACCOR will be maintained.
The Company prudently selects its network of accredited contractors, and monitors the development of each
project from project inception, up to project turnover.
RISKS RELATING TO THE DEVELOPER
1. The Developer will derive a significant portion of its revenue from OFWs, expatriate Filipinos, balikbayans and other overseas buyers, which exposes the Company to risks relating to the performance of the economies where they are located
A number of factors could reduce the number of OFWs, remittances from OFWs or the purchasing power of
expatriate Filipinos, Balikbayans and other overseas buyers. These include:
•
•
•
a downturn in the economic performance of the countries and regions where a significant number of
these potential customers are located, such as the United States, France, Italy, the United Kingdom,
Hong Kong, Japan, Korea, Taiwan, Singapore, the United Arab Emirates, Qatar and Bahrain, among
others
a change in Government regulations that currently exempt the income of OFWs from taxation in the
Philippines;
the imposition of Government restrictions on the deployment of OFWs to particular countries or regions, such as the Middle East; and
23
•
restrictions imposed by other countries on the entry or the continued employment of foreign workers.
Any of these events could adversely affect demand for the Developer's project from OFWs, expatriate Filipinos, Balikbayans and other overseas buyers, which could materially and adversely affect its business, financial condition or results of operations which may result in delay in the completion of its development
projects.
2. The Developer might not be able to generate sufficient funds internally or through external financing to operate and grow its business as planned.
The real estate business is capital intensive and requires significant capital expenditures to develop and implement new projects and complete existing projects. While the Developer may have funded a significant
portion of its capital expenditure requirements internally, it may utilize external sources of financing. However, it might not be able to continue funding its capital expenditure requirements internally or obtain sufficient funds externally on acceptable terms or at all. Its ability to raise additional equity financing from nonPhilippine investors is subject to foreign ownership restrictions imposed by the Philippine Constitution and
applicable laws. Its access to debt financing is subject to many factors, many of which are outside the Developer's control. For example, political instability, an economic downturn, social unrest or changes in the Philippine regulatory environment could increase the Developer's costs of borrowing or restrict its ability to obtain debt financing. In addition, the disruptions in the capital and credit markets may continue indefinitely,
which could adversely affect its access to financing. Inability to obtain financing on acceptable terms would
adversely affect the Developer's ability to operate and execute its growth strategies and impacts the completion of its development projects.
The Developer is endeavoring to broaden its sources of capital.
3. The Company's reputation may be adversely affected if CLC does not complete the project on time
or to customers’ requirements.
If the Developer experiences construction or infrastructure failures, design flaws, significant project delays,
quality control issues or other problems, this could have a negative effect on its reputation and make it more
difficult to attract new customers to new and existing development projects. Any negative effect on the Developer’s reputation could also adversely affect the Company’s ability to market its 152 condominium units
in Acqua 6 Tower. This in turn could adversely impact its capital investment requirements. Any of these
events could adversely affect business, results of operations or financial condition.
The Company shall prudently monitor the development of each stage of the project, from inception, up to
project turnover, to quickly address possible cost and completion risks.
4. The Company may suffer losses that are not covered by its insurance.
The Company may be negatively affected due to the occurrence of typhoons, severe storms, earthquakes,
floods, fires or other natural disasters or similar events. There are losses for which the Company cannot obtain insurance at a reasonable cost or at all. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose all or a portion of the capital invested in purchasing the152 condominium unitsas well as the anticipated future turnover from the property. Any material uninsured loss could materially
and adversely affect the Company‘s business, financial condition and results of operations.
RISKS RELATING TO THE PHILIPPINES
Any political instability in the Philippines may adversely affect the business operations, plans, and prospects of the Company
24
The Philippines has from time to time experienced severe political and social instability. The Philippine
Constitution provides that, in times of national emergency, when the public interest so requires, the Government may take over and direct the operation of any privately owned public utility or business. In the last few
years, there were instances of political instability, including public and military protests arising from alleged
misconduct by the previous administration.
On 12 December 2011, the House of Representatives initiated impeachment proceedings against Renato Corona, Chief Justice of the Supreme Court of the Philippines. The impeachment complaint accused Corona of
improperly issuing decisions that favored former President Arroyo, as well as failure to disclose certain
properties, in violation of rules applicable to all public employees and officials. The trial of Chief Justice
Corona began in January 2012 and ended in May 2012, with Corona found guilty with respect to his failure
to disclose to the public his statement of assets, liabilities, and net worth, and was impeached. In July 2013, a
major Philippine newspaper exposed a scam relating to the diversion and misuse of the Priority Assistance
Development Fund by some members of Congress through pseudo-development organizations headed by
Janet Lim Napoles. As a result of this exposé, a number of investigations, including one in the Senate, have
been launched to determine the extent of the diversion of the Priority Assistance Development Fund and the
Government officials and the private individuals responsible for the misappropriation of public funds. On 16
September 2013, cases of plunder and malversation of public funds were filed with the Office of the Ombudsman against Janet Lim Napoles, three Senators, a few members of the House of Representatives and
other Government personnel.
Macro-economic conditions of the Philippines may adversely affect the Company’s business and prospectus
Historically, the Philippines’ sovereign debt has been rated relatively low by international credit rating agencies. Although the Philippines’ long-term foreign currency-denominated debt was recently upgraded by each
of Standard & Poor’s, Fitch Ratings and Moody’s to investment-grade, no assurance can be given that Standard & Poor’s, Fitch Ratings or Moody’s or any other international credit rating agency will not downgrade
the credit ratings of the Government in the future and, therefore, Philippine companies. Any such downgrade
could have an adverse impact on the liquidity in the Philippine financial markets, the ability of the Government and Philippine companies, including the Parent Company, to raise additional financing and the interest
rates and other commercial terms at which such additional financing is available
Natural or other catastrophes, including severe weather conditions and epidemics, that may materially
disrupt the Company’s operations, affect guest traffic and result in losses not covered by its insurance
The Philippines has experienced a number of major natural catastrophes over the years, including typhoons,
droughts, volcanic eruptions and earthquakes. In October 2013, a 7.2 magnitude earthquake affected Cebu
and the island of Bohol, and on November, 2013, Super Typhoon Haiyan (called Yolanda in the Philippines)
caused destruction and casualties of an as yet undetermined amount, in Tacloban, certain parts of Samar, and
certain parts of Cebu City, all of which are located in the Visayas, the southern part of the Philippines. There
can be no assurance that the occurrence of such natural catastrophes will not materially disrupt the Company’s operations and the operation of the Acqua 6 Tower –Novotel Suites Manila. As a result, the occurrence
of natural or other catastrophes or severe weather conditions may adversely affect the Company’s business,
financial condition and results of operations.
There can be no assurance that the Company is fully capable to deal with these situations and that the insurance coverage it will maintain will fully compensate it for all the damages and economic losses resulting
from these catastrophes.
Political instability or threats that may disrupt the Company’s operations could result in losses not covered by the Company’s insurance
No assurance can be given that the political environment in the Philippines will remain stable and any political instability in the future could reduce consumer demand, or result in inconsistent or sudden changes in
25
regulations and policies that affect the Company’s business operations, which could have an adverse effect
on the results of operations and the financial condition of the Company.
Increased political instability threats or occurrence of terrorist attacks, enhanced national security measures,
and conflicts in the Middle East and Asia, as well as territorial and other disputes between China and the
Philippines (and a number of Southeast Asian countries), which strain international relations, may reduce
consumer confidence and economic weakness and adversely affect the Company’s business plans and prospects.
The Philippines, China, and several Southeast Asian nations have been engaged in a series of long standing
territorial disputes over certain islands in the West Philippine Sea, also known as the South China Sea. Despite efforts to reach a compromise, a dispute arose between the Philippines and China over a group of small
islands and reefs known as the Scarborough Shoal. In April and May 2012, the Philippines and China accused one another of deploying vessels to the shoal in an attempt to take control of the area, and both sides
unilaterally imposed fishing bans at the shoal during the late spring and summer of 2012. These actions
threatened to disrupt trade and other ties between the two countries, including a temporary ban by China on
Philippine banana imports, as well as a temporary suspension of tours to the Philippines by Chinese travel
agencies. Since July 2012, Chinese vessels have reportedly turned away Philippine fishing boats attempting
to enter the shoal, and the Philippines has continued to protest China’s presence there. In January 2013, the
Philippines sent notice to the Chinese embassy in Manila that it intended to seek international arbitration to
resolve the dispute under the United Nations Convention on the Law of the Sea. China has rejected and returned the notice sent by the Philippines requesting arbitral proceedings. Chinese vessels have also recently
confronted Philippine vessels in the area, and the Chinese government has warned the Philippines against
what it calls provocative actions. Recent talks between the Government of the Philippines and the United
States of America about increased American military presence in the country, particularly through possible
American forays into and use of Philippine military installations, may further increase tensions.
In early March 2013, several hundred armed Filipino-Muslim followers of Sultan Jamalul Kiram III, the selfproclaimed Sultan of Sulu from the south of the Philippines, illegally entered Lahad Datu, Sabah, Malaysia
in a bid to enforce the Sultan of Sulu’s historical claim on the territory. As a result of the illegal entry, these
followers engaged in a three-week standoff with the Malaysian armed forces, resulting in casualties on both
sides. Clashes between the Malaysian authorities and followers of the Sultan of Sulu have killed at least 98
Filipino-Muslims and 10 Malaysian policemen army since 1 March 2013. In addition, about 4,000 FilipinoMuslims working in Sabah have reportedly returned to the southern Philippines.
On 9 May 2013, a Philippine Coast Guard ship opened fire on a Taiwanese fisherman’s vessel in a disputed
exclusive economic zone between Taiwan and the Philippines, killing a 65-year old Taiwanese fisherman.
Although the Philippine government maintained that the loss of life was unintended, Taiwan imposed economic sanctions on the Philippines in the aftermath of the incident. Taiwan eventually lifted the sanctions in
August 2013 after a formal apology was issued by the Government of the Philippines. However, the incident
has raised tensions between the two countries in recent months.
Should territorial disputes between the Philippines and other countries in the region continue or escalate further, the Philippines and its economy may be disrupted and the Company’s operations could be adversely
affected as a result. In particular, further disputes between the Philippines and other countries may lead to
reciprocal trade restrictions on the other’s imports or suspension of visa-free access and/or permits. Any impact from these disputes could materially and adversely affect the Company’s business, financial condition
and results of operations.
Investors may face difficulties enforcing judgments against the Company
It may be difficult for investors to enforce judgments against the Company. It may particularly be difficult
for investors to effect service of process upon any officer who is not a resident of the country where judgments from courts or arbitral tribunals are obtained outside the Philippines.
26
The Philippines is party to the United Nations Convention on the Enforcement and Recognition of Arbitral
Awards, though it is not party to any international treaty relating to the recognition or enforcement of foreign
judgments. Nevertheless, the Philippine Rules of Civil Procedure provide that a judgment or final order of a
foreign court is, through the institution of an independent action, enforceable in the Philippines as a general
matter, unless there is evidence that: (i) the foreign court rendering judgment did not have jurisdiction, (ii)
the judgment is contrary to the laws, public policy, customs or public order of the Philippines, (iii) the party
against whom enforcement is sought did not receive notice, or (iv) the rendering of the judgment entailed
collusion, fraud, or a clear mistake of law or fact.
RISKS RELATING TO THE OFFER AND THE OFFER SHARES
There may be a limited market for the Preferred Shares, so there may be no liquidity in the market for the
Offer Shares and the price of the Offer Shares may fall
The Preferred Shares will not be listed and traded on the PSE. As there may be limited liquidity in the Offer
Shares, there can be no assurance that an active market for the Offer Shares will develop following the Offer
or, if developed, that such market will be sustained.
The Offer Shares may not be a suitable investment for all investors
Each prospective investor in the Offer Shares must determine the suitability of that investment in light of its
own circumstances. In particular, each prospective investor should:
•
have sufficient knowledge and experience to make a meaningful evaluation of the Company and its
businesses, the merits and risks of investing in the Offer Shares and the information contained in this
Prospectus,
•
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Offer Shares and the impact the Offer Shares will
have on its overall investment portfolio,
•
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Offer
Shares, including where the currency for purchasing and receiving the share in the Net Room Rental
Revenue on the Offer Shares is different from the potential investor’s currency,
•
understand and be familiar with the behavior of any relevant financial markets, and
•
be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
The market price of the Preferred Shares may be volatile, which could cause the value of investors’ investments in the Company to decline
The market price of securities can and does fluctuate, and it is impossible to predict whether the price of the
Preferred Shares will rise or fall or even lose all of its value. The valuation and resale of Preferred Shares
will be highly dependent on the supply and demand for the shares. Although, the issuer may have little or no
direct competitor currently identified in the market, there is no guarantee that this will continue to be the
case.
The market price of the Preferred Shares could be affected by several factors, including:
• general market, political and economic conditions,
27
•
•
•
•
changes in earnings estimates and recommendations by financial analysts,
the market value of the assets of the Company,
changes to Government policy, legislation or regulations, and
general operational and business risks.
In addition, many of the risks described elsewhere in this Prospectus could materially and adversely affect
the market price of the Preferred Shares.
Shareholders may be subject to limitations on minority shareholders rights
The obligation under Philippine law of majority shareholders and directors with respect to minority shareholders may be more limited than those in certain other countries such as the United States or United Kingdom. Consequently, minority shareholders may not be able to protect their interests under current Philippine
law to the same extent as in certain other countries. There can be no assurance that legal rights or remedies
of minority shareholders will be the same, or as extensive, as those available in other jurisdictions or sufficient to protect the interests of minority shareholders.
The Offer Shares relates to the Preferred Shares of the Company and are non-voting shares.
The Philippine Corporation Code, however, provides for certain protective rights to minority shareholders by
requiring a vote by the shareholders representing at least two-thirds of the Company’s outstanding capital
stock for certain corporate acts, including non-voting shares.
RISKS RELATING TO CERTAIN STATISTICAL INFORMATION IN THIS PROSPECTUS
Certain information contained herein is derived from unofficial publications
Certain information in this Prospectus relating to the Philippines, the industries in which the Company competes and the markets in where the Company operates, including statistics relating to market size, are derived
from various Government and private publications. This Prospectus also contains industry information which
was prepared from publicly available third-party sources. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and
completeness of that information is not guaranteed. The information contained in the Industry section may
not be consistent with other information. Similarly, industry forecasts and other market research data, including those contained or extracted herein, have not been independently verified by the Company, and may not
be accurate, complete, up-to-date or consistent with other information compiled within or outside the Philippines. Prospective investors are cautioned accordingly.
Non-verification of Certain Information
The section of this Prospectus entitled “Industry” was not independently verified by the Company, or any of
their respective affiliates or advisors.
28
EXCHANGE RATES
The PDS, a computer network supervised by the BSP, through which the members of the Bankers Association of the Philippines effect spot and forward currency exchange transactions, was introduced in 1992. The
PDS was adopted by the BSP as a means to monitor foreign exchange rates. The BSP Rate is the closing spot
rate for the purchase of U.S. dollars with Pesos, which is quoted on the PDS and published in the BSP’s Reference Exchange Rate Bulletin and major Philippine financial press on the following business day. On 27
December 2013, the last business day in 2013 in the Philippines, the closing BSP Rate was ₱44.395=
US$1.00. On 29 August 2014, the closing BSP Rate was ₱43.590 = US$1.00.
The following table sets forth certain information concerning the BSP Rate between the Peso and the U.S.
dollar for the periods and dates indicated, expressed in Pesos per US$1.00:
Peso/U.S. dollar exchange rate
Year
Period end
Average(1)
High(2)
Low(3)
2007 ..................................................................
41.401
46.182
49.130
41.210
2008 ..................................................................
47.485
44.474
49.999
40.330
2009 ..................................................................
46.356
47.641
49.050
46.000
2010 ..................................................................
43.885
45.120
47.100
42.530
2011 ..................................................................
43.928
43.310
44.580
41.925
2012 ..................................................................
41.192
42.237
44.130
40.850
2013 ..................................................................
44.414
42.430
44.750
40.570
January .......................................................
45.155
44.972
45.370
44.450
February .....................................................
44.656
44.861
45.410
44.430
March .........................................................
44.996
44.798
45.290
44.380
April………………………………………
44.463
44.628
44.940
44.280
May………………………………………
43.927
43.890
44.500
43.550
June……………………………………….
43.780
43.808
44.120
43.585
July……………………………………….
43.421
43.458
43.615
43.235
August……………………………………
43.648
43.789
44.080
43.598
September…………………………………
44.965
44.191
45.085
43.520
October……………………………………
44.880
44.879
44.978
44.820
2014
__________________
(1)
Weighted average rate under the Philippine Dealing System (“PDS”) starting August 4, 1992.
(2)
Highest closing exchange rate for the period.
(3)
Lowest closing exchange rate for the period.
Source: Reference Exchange Rate Bulletin, Treasury Department of the BSP.
29
USE OF PROCEEDS
Based on the Offer Price per Offer Share, the Company expects to raise gross proceeds amounting to approximately ₱1,612,001,768 from the Offer.
The following are the estimated expenses to be incurred in relation to the Offer:
Proceeds from the
Offer
(₱ millions)
Total proceeds from the Offer
1,612
Commission
Advertising
Tradeshows and Venue Rentals
Sales Allowances and Incentives
Exchange Program Cost
96.7
16.1
56.4
40.3
1.6
SEC registration, filing and research fees
.3
Estimated professional fees (including legal, audit, and financial advisory fees)
5
216.5
Total estimated expenses
1,395.5
Estimated net proceeds from the Offer
The Company expects to use the net proceeds from the Offer, estimated to be P1,395,527,258, after deducting the above expenses, for the following:
1. Pay to CLC the total contract price of Php1,075,112,990 for the purchase of 152 units
30
2. Other Operating Expenses
Amount
Other Operating Expenses/Working Capital
(₱ millions)
General and Admin Expenses
186.7
Interest Expense
50.3
Taxes
83.4
Total Estimated Other Operating Expenses
320.4
Proceeds allotted for other operating expenses/working capital will be used for expenses, which include
among others, general and administrative expenses such as salaries, supplies, utilities, communication,
miscellaneous expenses and other unexpected costs that may arise. Any remaining portion shall inure to the
coffers of the Company, for such purposes as may be warranted in the ordinary course of business.
In the event of any material deviation or adjustment in the planned uses of the proceeds, the Company shall
inform the Preferred Shareholders and the SEC thirty (30) days prior to its implementation.
No use of proceeds is contemplated to discharge debt, to acquire other assets or finance the acquisition of
other businesses, or reimburse any officer, director, employee or shareholder for services rendered, assets
previously transferred, money loaned, advanced or otherwise.
31
PREFERRED SHAREHOLDERS’ ENTITLEMENTS & DIVIDENDS
Annual Usage Entitlement
A Preferred Shareholding is entitled to use and occupy, for 28 nights per year, rooms owned by the Company
in Acqua 6 Tower – Novotel Suites Manila. The room entitlement of a Preferred Shareholder shall
correspond to the class of Preferred Share held as follows:
Class of Preferred Share
Room Entitlement
Preferred Class A
-
Studio Room
Preferred Class B
-
Deluxe 1-Bedroom
Preferred Class C
-
Superior 1-Bedroom
Preferred Class D
-
Premier 1-Bedroom
Reservation for the use shall be offered on a first come first serve basis and shall take into consideration the
usage entitlements of the other Preferred Shareholders.
a. Subject to the provisions of applicable law, all classes of the Preferred Shares of the Corporation shall be
non-voting.
b. Subscription to any class of the Preferred Shares shall be for a minimum of thirteen (13) shares and in
multiples of thirteen (13) shares thereafter (“Board Lot”).
c. A Preferred Shareholder may not sell or transfer their shares for less than a Board Lot.
d. A Preferred Shareholder may not sell, transfer or otherwise dispose of their shares until the same has been
fully paid and subject to the right of first refusal of the Common Shareholder.
e. A Preferred shareholder shall be subject to a lock-up of at least six (6) months from the date he/she/it has
fully paid their shares
f. The Preferred shareholder shall be entitled to use and occupy, for twenty-eight (28) night per year, the
rooms owned by the Corporation in Acqua 6 Tower subject to the following limitations:
•
•
•
•
•
•
•
•
•
Holders of Preferred A Shares shall be entitled to use the Studio room only.
Holders of Preferred B Shares shall be entitled to use the One Bedroom Deluxe Room only.
Holders of Preferred C Shares shall be entitled to use the One Bedroom Superior Room only.
Holders of Preferred D Shares shall be entitled to use the One Bedroom Premier Room only
The exercise by the Preferred Shareholders of the Annual Usage Entitlement shall be subject to the
availability of rooms and the reservation rules and regulations of the Corporation and/or hotel
manager engaged by the Corporation to manage its property.
Exercise of the Annual Usage Entitlement shall be taken in minimum blocks of not less than three (3)
consecutive nights stay up to a maximum of twenty (28) consecutive nights, subject to the limitations
herein provided for High and Shoulder Seasons.
Annual Usage Entitlements are non-cumulative, unused Annual Usage Entitlements for a particular
year shall not be carried over to the subsequent year
A Preferred Shareholder shall only be entitled to their Annual Usage Entitlements upon full payment
of their shares and payment of all annual dues and service fees, provided further, that such Preferred
Shareholders are not considered as delinquent.
Use of Annual Usage Entitlements shall be subject to a usage fee for each night during which a
Preferred Shareholder occupies a room pursuant to their exercise of their respective Annual Usage
Entitlement. The usage fee shall be payable upon the checkout by the Preferred Shareholder. The
usage fee shall cover the costs of room amenities and housekeeping services whilst the Preferred
Shareholders are in residence together with the costs attributable to utilities service charge and any
local taxes which may be payable in respect of such service. The usage fee shall be no more than 30%
32
of the BAR of each room category. For example, if a Studio BAR is Peso 6,000/night, then the usage
fee would be Peso 1,800/night.
Use of rooms in excess of a Preferred Shareholders Annual Usage Entitlement shall be paid at the
standard publish rate of the Hotel Manager and paid immediately upon checkout.
Preferred Shareholders may only transfer the use of all or a part of their Annual Usage Entitlement to
direct family members or a nominated party or parties, who shall be subject to the same rules and
regulations of the Company and/or Hotel Manager engaged by the Company.
The Preferred Shareholders shall be subject to such other rules and regulations which the Corporation
or the Hotel Manager may, from time to time, issue with respect to the use of the Annual Usage
Entitlement, provided that the Preferred Shareholders are given at least thirty (30) days notice of such
rules and regulations.
The table below shows the total available rooms for preferred shareholders annually to avail of their
28 days of usage and entitlement:
•
•
•
•
Units
Studio Suites
1 Bedroom Deluxe
1 Bedroom Super Deluxe
1 Bedroom Premier
Total
122
10
10
10
152
Days
365
365
365
365
Total Units Per % of Units Allocated
Year
for Free Nights (4/13)
44,530
3,650
3,650
3,650
55,480
31%
31%
31%
31%
Units Allocated for
Free Nights Per
Day
38
3
3
3
47
Annual Room
Allocation
13,804
1,132
1,132
1,132
17,198
*47.12 units
Each Preferred Shareholder shall designate a Primary User at the time of purchase or subscription of the
Offer Shares. The Primary User shall have exclusive rights to use the reservation system to be adopted by
Accor. Only Preferred Shareholders in good standing reservation request will be entertained. The following
rules shall govern the reservation and exercise of a Preferred Shareholders’ Annual Usage Entitlement to
ensure that all Preferred Shareholders of a fair and equitable allocation of their Annual Usage Entitlements:

Annual Usage entitlements will be managed through a floating fractional system. Meaning that
entitlement weeks can be used at anytime throughout the year, subject to availability and seasonality.
“CALC” through a structured reservation system will on a best efforts basis ensure that Preferred
Shareholders have their choice of usage weeks. The reservation system will ensure a fair and
equitable allocation of usage weeks. For example, if a preferred shareholder successfully books a
High Season period this year, they may not be able to book for the same period in the following year.
Priority will be given to another Preferred Shareholder. However alternative week/s will be offered
or the preferred shareholder can exchange their weeks through the Interval International exchange
program.
•
A Preferred Shareholder may reserve not more than two weeks of occupancy within the High Season
and not more than two weeks within the Shoulder Season; there is no limitation for annual usage
entitlements for periods other than High and Shoulder seasons. Please see detailed seasonality
calendar on page 35 of this Prospectus
•
Use Period Reservation must be made by the preferred shareholders up to 12 months and no less 6
months prior to the intended date of stay. A Preferred Shareholder who fails to make a Use Period
Reservation shall not be assigned a Use Period, but may avail of a Space Available Reservation.
•
A Space Available Reservation must be made more than 30 days but not less than 7 days prior to the
intended date of stay.
•
Use Periods must be used within the current Use Year. Unused Use Periods may not be carried to the
subsequent Use Year. Similarly, Use Periods from future Use Years may not be brought forward.
33
•
Upon initial confirmation of a reservation request, the Preferred Shareholder shall have 48 hours to
cancel such request by email or fax notification to the reservation office without penalty. If no
cancellation notification is received within the 48-hour period following the initial confirmation, the
request shall be deemed “confirmed”. Cancellation of a confirmed reservation shall be subject to the
rules on Cancellation, Changes and No-shows.
•
Preferred Shareholders shall be given priority to use the units in the category to which their shares
correspond. An upgrade to a 1-bedroom unit may be given to a Preferred Shareholder, who holds
Preferred Class A shares, if no studio unit is available at the time he/she is scheduled to use his/her
Annual Usage Entitlement. If for some reason no 1-bedroom unit is available, then a Preferred
Shareholder who holds Preferred Class B, Class C or Class D shares may avail of downgrade
consisting of at least 2 studio rooms; provided that the bookings are made within the reservation
period required and that space is available.
•
The Preferred Shareholders are required to pay a Usage Fee for each night during which they occupy a
room pursuant to the exercise of their respective Annual Usage Entitlements. Such Usage Fee will be
payable upon the checkout of the Preferred Shareholder. The Usage Fee will be calculated according
to the number of nights of the Preferred Shareholder’s specific reservation. The Usage Fee is
formulated in order to cover the costs of room amenities and housekeeping services whilst the
Preferred Shareholders are in residence together with costs attributable to utilities and any local taxes
which may be payable in respect of such services.
•
The exercise of the Annual Usage Entitlement shall be taken in minimum blocks of not less than three
(3) consecutive nights stay
•
A Preferred Shareholder shall only be entitled to their Annual Usage Entitlements upon full payment
of their shares and payment of all annual dues and service fees, provided further, that such Preferred
Shareholders are not considered as delinquent;
•
Use of rooms in excess of a Preferred Shareholders’ Annual Usage Entitlement shall be paid at the
standard published rate of Accor and paid immediately upon checkout by the Preferred Shareholder
•
The Preferred Shareholders may only transfer the use of all or a part of their Annual Usage
Entitlement to direct family members or a nominated party or parties, who shall be subject to the same
rules and regulations of the Company and Accor
34
SEASONALITY CALENDAR:
January
M
T
W
Th
F
February
Sat
Sun
M
T
W
Th
March
F
Sat
Sun
M
T
W
Th
F
Sat
Sun
Sat
Sun
New Year's
Holy Week*
April
M
T
W
Th
May
F
Sat
Sun
M
T
W
Th
June
F
Sat
Sun
M
T
W
Th
F
Independence
School Holiday
School Holiday
July
M
T
W
M
T
W
Th
August
F
Sat
Sun
M
T
Sat
Sun
M
T
October
Th
F
W
Th
September
F
Sat
Sun
M
T
Sat
Sun
M
T
November
W
Th
F
W
Th
F
Sat
Sun
Sat
Sun
December
W
Th
F
Christmas / Rizal's Day
(Long Weekend)
Semestral Break
Legend:
High Season
Shoulder Season
Regular Days
Description
No of Days
Available
Total Rooms /
Rooms Per Day* Nights Available
High Season
New Year (Jan 1-14)
Holy Week (including pre & post)
Christmas Break (Dec 18-31)
Total High Season
14
21
14
49
47
47
47
658
987
658
2,303
Shoulder Season
Independence Day (June 12-14)
School Holiday
Semestral Break (last week of Oct)
Total Shoulder Season
3
61
7
71
47
47
47
143
2,876
332
3,352
Regular Days
245
47
11,544
Total
365
47
17,198
*Dates may change based upon actual government declaration
35
Share in Net Room Rental Revenue
The Preferred Shareholders shall be entitled to a share in the Net Room Rental Revenue at the rate of 40% for
all of the 152 rooms owned by the Company. The share of a Preferred Shareholder in the NRRR, shall be
payable annually. The share of a Preferred Shareholder in the NRRR shall be calculated based on the attributable sq.m. corresponding to the class of Preferred Shares held by such Preferred Shareholder for every 13
Preferred Shares held.
In computing the proportionate share of each Preferred Shareholder in the NRRR, the following formula shall
be used:
(Net Room Rental Revenue x 40%)
x
6,036 sq.m
Attributable sq.m. based on
class of shares held for every
13 Preferred Shares held
The corresponding attributed sq.m. of each class of Preferred Shares are as follows:
Class of Preferred Shares
Corresponding Attributed
SQM for every 13 Preferred
Shares Held
Preferred A Shares
-
8
Preferred B Shares
-
11.75
Preferred C Shares
-
19
Preferred D Shares
-
21.75
Refer to the sample computation below:
(Php110,296,894 x 40% - 5% withholding tax)
=
Php6,944/sqm
6,036 sqm
Attributed owner's share for
every 13 Pref Shares held
SQM
Owner's
Share per sqm Owner's share
Preferred A Shares
8.00
6,944.00
55,552
Preferred B Shares
11.75
6,944.00
81,592
Preferred C Shares
19.00
6,944.00
131,936
Preferred D Shares
21.75
6,944.00
151,032
*Assumed figure for computation purposes only
36
Other Benefits
Interval Exchange Program
Interval International, Inc. (“Interval”) of Miami, Florida, USA has agreed to provide its exchange program
(the “Interval Exchange Program”) to Preferred Shareholders of the Company. Under this program and subject to the conditions stated below, Preferred Shareholders may exchange a minimum of one and week and up
to four weeks of their Annual Usage Entitlement for stays at properties affiliated with Interval in different
parts of the world.
Interval is an independently operated exchange company. Neither the Developer nor the Property Manager
are agents for Interval and no representations or promises made by them are binding on Interval or vice versa.
All exchanges to any other Interval affiliated property are arranged through Interval. The procedures for exchanging, costs and other features of the exchange program are more fully described in separate materials
distributed by Interval.
The Preferred Shareholder’s initial membership in the Interval Exchange Program shall be at the Company’s
cost. The initial membership term shall be five years following the payment of the full Purchase Price (or the
initial deposit, in the case of Company financing) and the execution of an agreement between the Company
and Interval. Thereafter, the Preferred Shareholder may maintain his or her membership by paying Interval
the corresponding annual membership fee, which will be discussed accordingly with the shareholders prior to
the lapse of the initial membership, in accordance with the terms and conditions established by Interval. To
utilize the exchange service, an exchange fee is payable per Weekly Use Period exchanged at the time the
request for the exchange is made. Representations or promises regarding the Interval Exchange Program as
well as Interval’s current or future services are limited to those made in written materials supplied by Interval. The accuracy of the content of those materials as well as the accuracy of the representations made therein
are the sole responsibility of Interval.
37
ACCOR Advantage Plus
ACCOR Advantage Plus has agreed to provide membership to Preferred Shareholders. Under this program
and subject to membership terms and conditions Preferred Shareholder will be able to enjoy exclusive accommodation and dining benefits at over 500 ACCOR Hotels and Resorts throughout the Asia pacific Region. Participating countries include China, Singapore, Hong Kong, Thailand, Australia, Vietnam, South Korea, Malaysia, Philippines, New Zealand and Indonesia. Current benefits, as of February 2015 are as detailed
below;
Dining Discounts
Accor Advantage Plus members receive the following discounts when dining at any of the food and beverage
outlets in Sofitel Philippine Plaza
1 pax 25 %
3 pax 33%
4 to 9 pax 25%
2 pax 50%
4 pax 25%
10 pax or more 20%
Beverage discount (Asia only) 15%
Up to 50% dining discount in participating Accor Hotels and Resort restaurant for breakfast, lunch and dinner in Asia Pacific.
Additional Dining Certificates @ SPIRAL
 One (1) Birthday Celebration Certificate – Enjoy a birthday cake and 50% discount for a table of up
to 10 persons
 One (1) Group Dining Certificate – Enjoy 50% discount for a table of up to 10 persons
 One (1) Lunch Dining Certificate – Enjoy 50% discount for lunch Mon-Fri for a table of up to 10
persons
Accommodation Discounts
 10% off the best rate guarantee on all daily rates, hotel public promotions and specials, including
ACCOR Super Sales
 Red Hot Room Rates –Up to 50% discount exclusive to ACCOR members. Not available to the general public
 Exclusive website –access to member only sales and promotions on www.accoradvantageplus.com
 One (1) Complimentary Night –Loaded on to the card and can be used in any ACCOR Hotels and
Resorts in Asia Pacific
Additional Benefits
 20% off laundry and business center service
 10% off delicatessen purchases
Additional Benefits
 Earn 50% more points in Le Club –Automatic Enrollment in Le Club and complimentary upgrade to
Silver Status level.
 One (1) Fully TRANSFERABLE Member for a Day Certificate –Enjoy full members benefits, including dining and accommodation for 24 hours anywhere in Asia Pacific.
 Preferred Shareholders will be enrolled into AAP for an initial period of 1 year, following payment
of 20% of the full payment price.
Thereafter, the Preferred Shareholder may maintain his or her membership by paying AAP the corresponding
annual membership fee in accordance with the terms and conditions established by AAP. Representations or
promises regarding the AAP Membership as well as AAP’s current or future services are limited to those
made in written materials supplied by AAP. The accuracy of the content of those materials as well as the accuracy of the representations made therein are the sole responsibility of AAP.
38
DIVIDENDS
The Company is authorized under Philippine law to declare dividends, subject to certain requirements. The
payment of dividends, either in the form of cash or shares, will depend upon the Company's earnings, cash
flow and financial condition, among other factors. The Company may declare dividends only out of its unrestricted retained earnings. These represent the net accumulated earnings of the Company with its capital unimpaired, which are not appropriated for any other purpose. The Company may pay dividends in cash, by the
distribution of property, or by the issue of shares. Dividends paid in cash are subject to the approval by the
Board of Directors. Dividends paid in the form of additional shares are subject to approval by both the Board
of Directors and at least two-thirds of the outstanding share capital of the shareholders at a shareholders'
meeting called for such purpose.
The Company has not declared any dividends to date.
Under the Articles of Incorporation of the Company, as amended, the holders of Preferred Shares shall not be
entitled to receive dividends. Only the holders of Common Shares shall be entitled to receive dividends.
39
THE ACQUA 6 TOWER – NOVOTEL SUITES MANILA
The Acqua 6 Tower will be a unique phase of the overall Acqua Private Residences development that shall
comprise of approximately 459 units and a GFA of more than 30,000 sq.m.
The Acqua 6 Tower construction is expected to commence in the first half of 2015 and is expected to be
completed for occupation in approximately 48 months or September 2019. As of date, percentage of
completion is at 20%.
The Acqua 6 Tower will be divided into 2 distinct areas. There are approximately 149 units of Branded
Residences and 310 Hotel Suites, 152 of which will be owned by the Company and 158 units retained by the
Developer. The Developer retained units and the units owned by the Company will be operated as an All
Suite Hotel and Serviced Apartment, to be managed by Accor, the 6th largest Hotel Group in the World,
under the Novotel Suites Brand.
The total Acqua 6 Tower development is focused on delivering first class hospitality services to all
stakeholders and be distributed globally, thus delivering a truly international and globally recognized project
managed to international hotel standards.
Residents, shareholders and guests will be able to enjoy, a first class international restaurant, executive club
lounge, residents lounge, fitness and wellness center, executive meeting facilities, and iconic pool, all
supported by full hotel butler and concierge services.
The entire Acqua 6 Tower shall be divided into 3 segments: 149 Branded Residences, 152 units owned by the
Company and 158 units to be retained by the Developer.
The Acqua 6 Tower will be fully financed by CLC’s credit facility from a reputable bank in the Philippines.
40
149 Branded Residential Units
to be sold by CLC as retail units,
asAcqua Private Residences
@ Novotel Suites Manila
158 Hotel Suites
Owned by CLC and operated by Accor as
Novotel Suites Manila
152 Hotel Suites
to be sold by CLC to CALC divided into
7,904 Preferred Shares, operated by Accor as
Novotel Suites Manila
The Acqua 6 Tower will be a 40 storey building comprising of a Lobby/Ground Floor, 4 parking floors, 24
hotel floors and 11 residential floors. The hotel and residential floors are further broken down as:
Studio
1 Bedroom
2 Bedroom
3 Bedroom
Total
Branded Residential Units
125
8
2
14
149 units
84%
5%
1%
10%
100%
Hotel Units
244
61
5
-
310 units
79%
20%
2%
-
100%
342
93
20
5
459 units
41
Out of the 152 units owned by the Company, the following are the various unit types:
Studio
(approx. 32 sq.m.)
Deluxe 1 Bedroom
(approx. 47 sq.m)
Superior 1 Bedroom
(approx. 76 sq.m)
Premier 1 Bedroom
(approx. 87 sq.m)
122
10
10
10
Amenities at the Acqua 6 Tower
Developed to the standards expected in an upscale private residence, the Acqua 6 customized amenities will
provide owners and guests with a high level of service, tailored to the requirements of their stay and
residence:
•
•
•
•
•
•
•
Multi Cuisine All Day Dining Restaurant with 24-Hour Room Service
Cocktail Bar & Lounge
Executive Club, Residents Lounge and Meeting Suites
Fitness Centre
Feature Pool and Al Fresco Dining Area
Serviced and Self Service Laundry
24/7 Concierge Services
Accor
The 310 Hotel Suites will be managed and operated by Accor, the largest hotel group in the world, under the
Novotel Suites Brand.
42
Suite Novotel
Suite Novotel nurtures an offbeat, avant-garde spirit that invites guests to experience a new way of hotel living. Offering round-the-clock services, Suite Novotel promises its frequent traveller clientele more freedom
and autonomy for a truly pleasurable stay.
43
DETERMINATION OF THE OFFER PRICE
The Offer Price per Offer Share are as follows:
up to P166,667 per Preferred A Share or P2,166,671 per board lot
up to P238,889 per Preferred B Share or P3,105,557 per board lot
up to P383,333 per Preferred C Share or P4,983,329 per board lot
up to P444,444 per Preferred D Share or P5,777,772per board lot
The final Offer Price shall be determined upon the finalization of the various agreements to be entered into
by the Company and guided by the companies experience in the development of condominium real estate in
Manila specifically the additional 5 buildings within the overall Acqua development.
The Offer Shares will be offered at the following prices (i) up to ₱166,667 per Class A Share; (ii) up to
₱238,889 per Class B Share; (iii) up to ₱383,333 per Class C Share; and (iv) up to ₱444,444 per Class D
Share (collectively, the “Offer Price”). A total of up to 6,344 Class A Shares, 520 Class B Shares, 520 Class
C Shares and 520 Class D Shares will be outstanding after the Offer
The factors considered in determining the Offer Price were, among others, the total purchase price of the 152
condominium units of the Acqua 6 Tower of the Acqua Private Residences, the total estimated costs of the
fixtures, furniture, equipment, operating supplies required to operate the 152 units as a hotel suite in accordance with the standard of the Novotel Suite brand, and the prevailing market price of similar securities.
Since the Company and the Shares are not listed on any stock exchange, there is no market information for
the Offer Shares and there has been no market price for the Offer Shares derived from day-to-day trading.
Purchase Price
The total purchase price of the 152 units with a total area of 6,036 SQM is Php 1,075,112,990, representing
an average price of Php 178,111 per sqm, which comparable to other Century Properties branded condominium developments within Acqua and the Century City development and considering that all units will be
fully fitted to international hotel standards as set by ACCOR in relation to brand requirement of Novotel
Suites.
44
SELECTED FINANCIAL AND OPERATING INFORMATION
The following tables set forth the summary financial information for the Company and should be read in
conjunction with the independent auditors’ reports and the Company’s audited interim financial statements,
including the notes thereto, included elsewhere in this Prospectus, and the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” The summary financial information as of March 31, 2015 was derived from the Company’s audited interim financial statements, which
was prepared in accordance with PFRS and was audited by SGV & Co. in accordance with the Philippine
Standards on Auditing (“PSA”). The summary consolidated financial information below is not necessarily
indicative of the results of future operations.
STATEMENT OF COMPREHENSIVE INCOME
REVENUE
Interest income
=3,854
P
PRE-OPERATING EXPENSES
Filing fees
Taxes and licenses
Professional fees
Others
40,753
40,691
50,000
3,000
134,444
130,590
LOSS BEFORE INCOME TAX
PROVISION FOR INCOME TAX
771
NET PRE-OPERATING LOSS
131,361
OTHER COMPREHENSIVE INCOME
–
TOTAL COMPREHENSIVE LOSS
=131,361
P
BALANCE SHEET
ASSET
Cash
6,288,789
LIABILITY AND EQUITY
Accrued expenses
123,661
Equity
Capital stock
7,972,906
Deficit
(1,807,778)
Total Equity
6,165,128
6,288,789
45
STATEMENTS OF CASH FLOWS
CASH FLOW FROM PREOPERATINGACTIVITIES
Net pre-operating loss
(131,361)
Adjustment for interest income
(3,854)
Operating loss before working capital changes
(135,215)
Increase in accrued expenses
50,000
Net cash used in operations
(85,215)
Interest received
3,854
Net cash used in pre-operating activities
(81,361)
CASH FLOW FROM FINANCINGACTIVITY
Collection of subscription receivable
80,944
(417)
NET DECREASE IN CASH
CASH AT BEGINNING OF PERIOD
6,289,206
CASH AT END OF PERIOD
6,288,789
46
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (AUDITED)
The following discussion of the Company’s financial results should be read in conjunction with the independent auditors’ reports and the Company’s audited interim financial statements and notes thereto contained
in this Prospectus and the section entitled “Selected Financial and Operating Information.”
This discussion contains forward-looking statements and reflects the current views of the Company with respect to future events and financial performance. Actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors such as those set forth in the section entitled “Risk Factors” and elsewhere in this Prospectus.
OVERVIEW
The financial statements of the Company have been prepared using the historical cost basis. The financial
statements are presented in Philippine Peso (₱), the Company’s functional and presentation currency. All
amounts are rounded to the nearest peso except when otherwise indicated.
The financial statements of the Company have been prepared in compliance with Philippine Financial Reporting Standards (PFRS). These financial statements will be used for the Company’s filing and registration
of its preferred stocks and for its plan to conduct a public offering.
The Company was incorporated and registered with the Securities and Exchange Commission on November
6, 2014 and has not yet started commercial operations as of March 31, 2015.
FACTORS AFFECTING RESULTS OF OPERATIONS
The Company’s results of operations are affected by a variety of factors. Set out below is a discussion of the
most significant factors that may affect the Company’s results and which the Company expects to affect its
financial results in the future. Factors other than those set out below could also have a significant impact on
the Company’s results of operations and financial condition in the future. See “Risk Factors” beginning on
Critical Account Policies
Critical accounting policies are those that are both (i) relevant to the presentation of the Company’s financial condition and results of operations and (ii) require management’s most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the possible future solution of the uncertainties increase, those judgments become even more subjective and complex. To provide an understanding of
how the Company’s management forms its judgments about future events, including the variables and assumptions underlying its estimates, and the sensitivity of those judgments to different circumstances, the critical accounting policies discussed below have been identified. While the Company believes that all aspects of
its financial statements should be studied and understood in assessing its current and expected financial
condition and results of operations, the Company believes that the following critical accounting policies
warrant particular attention.
The preparation of the consolidated financial statements in conformity with PFRS requires management to
make judgments, estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Uncertainty about these judgments, assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amounts of assets and liabilities affected
in future periods. Significant accounting policies and methods used in the preparation of our consolidated
financial statements are described and disclosed under “Significant Accounting Judgments, Estimates and
Assumptions”.
47
DESCRIPTION OF STATEMENTS OF COMPREHENSIVE INCOME LINE ITEMS
The Company was incorporated and registered with the Securities and Exchange Commission on November
6, 2014 and has not yet started commercial operations as of March 31, 2015.
Financial Condition
The primary objective of the Company’s capital management is to ensure that it has sufficient capital to support its business. As the Company in its pre-operating stage, its ability to continue as a going concern is dependent on the favorable outcome of its future transactions. It depends on its ability to raise new capital,
accomplish its business plan and start operating profitably. The Company will manage its capital structure
and make adjustments to it, in light of changes in economic decisions.
ACCELERATION OF FINANCIAL OBLIGATIONS
There are no known events that could trigger a direct or contingent financial obligation that would have a
material effect on the Company’s liquidity, financial condition and results of operations.
OFF BALANCE SHEET ARRANGEMENTS
As of the date of this Prospectus, the Company has no material off-balance sheet transactions, arrangements,
and obligations. The Company also has no unconsolidated subsidiaries.
INCOME OR LOSSES ARISING OUTSIDE OF CONTINUING OPERATIONS
The company has no income or losses arising outside of continuing operations as of the date of this prospectus
QUALITATIVE AND QUANTITATIVE DISCLOSURE OF MARKET RISK
Credit Risk
Credit risk is the risk that one party to a financial assets and financial liabilities will fail to discharge an obligation and cause the other party to incur a financial loss. Credit risk management involves entering into financial assets and financial liabilities only with counterparties with acceptable credit rating. The Company
has minimal exposure to credit risk for the components of the statements of financial position as of March
31, 2015
The Company’s cash in bank is considered as high quality financial assets since this is maintained in a bank
with good credit rating.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its payment obligation when they fall due
under normal and stress circumstances. The Company maintains a level of cash deemed sufficient to finance
operations and to mitigate the effects of fluctuation in cash flows.
As of March 31, 2015, all financial assets and financial liabilities are due within one year.
Interest Rate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to fluctuations in interest rates that could negatively affect the potential margins in respect of the Company sales and could make it
more difficult for the Company to procure new debt on attractive terms.
48
BUSINESS
The Company was registered with the SEC on November 6, 2014, with an authorized capital stock of
P100,000,000 divided i) 94,164,560.00 Common Shares with a par value of P 1.00 per share; (ii) 6,344 Preferred Class A Shares with a par value of P 10.00 per share ; (iii) 520 Preferred Class B Shares with a par
value of P 100.00 per share; (iv) 520 Preferred Class C Shares with a par value of P 1,000.00 per share; and
(v) 520 Preferred Class D Shares with a par value of P 10,000.00 per share. As of the date of this Prospectus, 25,000,000 Common Shares was subscribed and P7,972,906 was paid up.
Name
Nationality
Type of
shares Subscribed
No. of Shares
Subscribed
Amount Subscribed (in P)
Amount Paid (in
P)
Filipino
Common
24,999,993
24,999,993.00
7,972,899
Tim Hallett
British
Common
1
1
1
Domie S. Eduvane
Filipino
Common
1
1
1
Carlos Benedict K. Rivilla IV
Filipino
Common
1
1
1
Isabelita S. Sales
Filipino
Common
1
1
1
Rhoel Alberto B. Nolido
Filipino
Common
1
1
1
Riza V. Tumale
Filipino
Common
1
1
1
Filipino
Common
1
1
1
Ma. Pamela
Labayen
Quizon-
Total
25,000,000
7,972,906
The Company is a wholly owned subsidiary of CLC which in turn is a wholly owned subsidiary of CPGI.
The Company through its parent company harnesses more than 28 years of expertise in the real estate industry.
On November 17, 2014, the Board of Directors and stockholders of the Company approved the offer of its
Preferred Shares to the public in order to raise funds to fully pay for the 152 rooms in Acqua 6 Tower of Acqua Private Residences it acquired from CLC.
The Company primary purpose is to acquire by purchase, own, hold, manage, administer, lease, or operate
152 condominium units of the Acqua 6 Tower of Acqua 6 Residences for the benefit of the shareholders.
The secondary purposes of the Company as stated in its AOI are as follows:
1. To invest and deal with the monies or properties of the Corporation in such manner as may from time to
time be considered wise or expedient for the advancement of its interest and to sell, dispose of or transfer
the business properties and goodwill of the Corporation or any part thereof at an opportune time to further the objectives of the Corporation;
2. In accordance with the requirements of the law, to raise money from the sale of its securities, including to
its stockholders for any of the purposes of the Corporation, and from time to time without limit as to
amount, to draw, make, accept, endorse, discount, transfer, assign, execute and issue promissory notes,
49
drafts, bills of exchange, warrants, bonds, debentures and other negotiable and transferable instruments
and evidence of indebtedness, and for the purpose of securing any of its obligations or contracts to convey, transfer, assign, deliver, mortgage and/or pledge all or any part of the property or assets at any time
held or owned by the Corporation on such terms and conditions as the Board of Directors of the Corporation or its duly authorized officer or agents shall determine and as may be permitted by law;
3. To enter into any lawful arrangement for sharing of profits, union of interest, reciprocal concession or cooperation, with any corporation, association, partnership syndicate, entity, person or governmental, municipal or public authority, domestic or foreign, in the carrying on of any business or transaction deemed
necessary, convenient or incidental to carrying out any of the purposes of this corporation;
4. To establish and operate one or more branch offices or agencies and to carry on any or all of its operations
and business without any restrictions as to place or amount including the right to hold, purchase or otherwise acquire, lease, mortgage, pledge and convey or otherwise deal in condominiums, buildings and
structures of whatever kind or nature anywhere within the Philippines;
5. To purchase or otherwise acquire, and to hold, own, trade and deal in, mortgage, pledge, assign, sell, exchange, transfer or otherwise dispose of goods, wares, merchandise and personal property of every class
and description and to transport the same in any manner;
6. To apply for, obtain, register, purchase, lease or otherwise acquire, and to hold, own, use, exercise, develop, operate and introduce, and to sell, assign, grant licenses or territorial rights in respect of, or otherwise
to turn to account or dispose of, any copyrights, trademarks, trade-names, brands, labels, patents, design
patents, improvements or processes used in connection with or secured under letters patent of any country, government or authority, or otherwise, in relation to any of the purposes herein stated; and to acquire, use, exercise, or otherwise turn to gain licenses or rights in respect of any such copyrights, trademarks, trade-names, brands, labels, patents, design patents, inventions, improvements, processes and the
like;
7. Insofar as may be permitted by law, to purchase or otherwise acquire the stocks, bond, and other securities
or evidence of indebtedness of any other corporation, association, firm or entity, domestic or foreign, and
to issue in exchange therefore its own stocks, bonds, or other obligations or to pay therefore in cash, or
otherwise; to hold for investment or otherwise own, use, sell deal in, dispose of, and turn to account any
such stocks, bonds, or other securities, and exercise the rights and powers of ownership, including the
right to vote thereon for any purpose;
8. Insofar as may be permitted by law, to do any act or things necessary or useful for the protection, development, improvement or operation of any person, corporation, association, firm or entity in or with
which this Corporation has an interest of any kind, whether as stockholder, manager, investment adviser,
technical consultant or otherwise including, among others, the power to extend all kinds of financial assistance by loan, guaranty, surety, or subsidy to such corporation, association, firm or entity without engaging in surety business;
9. To purchase, hold, cancel, re-issue, sell, exchange, transfer or otherwise deal in shares of its own capital
stock, bonds or other obligations from time to time to such an extent and in such manner and upon such
terms as its Board of Directors shall determine; provided that the Corporation shall not use its funds or
property for the purchase of its own shares of capital stock when such use would cause any impairment
of its capital stock, except to the extent permitted by law;
10. To merge, consolidate, combine or amalgamate with any corporation, firm, association or entity heretofore or hereafter created in such manner as may be permitted by law;
11. To acquire, take over, hold or control all or any part of the business, goodwill, property and other assets,
as may be allowed under the law, and to assume or undertake the whole or any part of the liabilities and
obligations of any person, firm, association or corporation, whether domestic or foreign, and whether a
50
going concern or not, engaging in or previously engaged in a business which the Corporation is or may
become authorized to carry on or which may be appropriated or suitable for the purposes of the Corporation, and to pay for the same in cash or in stock, bonds, or securities of the Corporation or otherwise, and
to hold, manage, operate, conduct and dispose of , in any manner, the whole or part of any such acquisitions, and to exercise all the powers necessary or convenient for the conduct and management thereof;
12. To enter into contracts and arrangements of every kind and description for any lawful purpose with any
person, firm, association corporation, municipality, body politic, county, territory, province, state, government or colony or dependency thereof, obtain from any government or authority any rights, privileges, contracts and concessions which the Corporation may deem desirable to obtain, carry-out, perform or
comply with such contracts or arrangements and exercise any such rights, privileges and concessions;
13. To guarantee, for and in behalf of the Corporation, obligations of other corporations or entities in which
it has lawful interest, including its affiliated companies, and to secure the repayment of the obligations
and liabilities of any such corporation, partnership, association in which the Corporation has an interest,
including its affiliated companies, by mortgage, pledge, assignment, deed of trust or other encumbrances
upon the monies and properties of the Corporation; and
14. To do and perform all acts and things necessary, suitable or property for the accomplishment of any of
the purposes herein enumerated or which shall at any time appear conducive to the protection or benefit
of the Corporation, including the exercise of the powers, authorities and attributes conferred upon corporations organized under the laws of the Philippines in general and upon domestic corporations in particular.
COMPETITIVE STRENGTHS
•
•
•
•
•
•
•
The first fully integrated and internationally branded 4 star hospitality project in the Philippines
International branded and global distribution through ACCOR one of the world’s leading hotel companies.
25,000 room supply deficit of new hotel rooms in Manila, by 2016.
Lack of new branded hotel and service apartments in Manila and Makati City to meet the growing
domestic and international tourism demands.
Affordable investment
Annual usage entitlement that meets the Filipino OFW home leave schedules.
The Company offers preferred shareholders a perpetual investment in real estate manifested by a
preferred share wherein the investor is entitled to and generous use of a home for a specific time period, with the benefit of a share of revenue, as derived from a recognized hotel global distribution
system, plus capital investment returns, which in turn is secured through a legal structure approved
by the SEC of the Philippines
HISTORY
Century Acqua Lifestyle Corporation (the Company) was incorporated and is domiciled in the Republic of
the Philippines on November 6, 2014. The Company is a wholly owned subsidiary of Century Limitless
Corporation (CLC or the Parent Company). CLC is a wholly owned subsidiary of Century Properties
Group, Inc. (CPGI). CPGI is a publicly-listed company, 66.7%-owned by Century Properties, Inc. (CPI)
and the rest by the public.
51
CORPORATE STRUCTURE
The following chart illustrates the Company’s material shareholders and parent company as of the date of
this Prospectus.
52
LEGAL PROCEEDINGS
There are no material pending legal proceedings, bankruptcy petition, conviction by final judgment, order,
judgment or decree or any violation of a securities or commodities law for the past five years to which the
Company or its directors or executive officers is a party or of which any of its material properties are subject
in any court or administrative government agency.
Certain Legal Proceedings Involving CLC and CPGI:
From time to time, CPGI and its Subsidiaries, its Board of Directors and Key Officers are subject to various
civil, criminal and administrative lawsuits and other legal actions arising in the ordinary course of its business. Typical cases include adverse claims over title to land, claims for recovery of money and damages and
claims for cancellations of sales agreements and refund of deposits. In the opinion of the Company's management, none of the lawsuits or legal actions to which it is currently subject will materially affect the daily
operations of its business nor will they have a material adverse effect on the Company's consolidated financial position and results of operations.
List of Cases for CPGI and CLC as of November 30, 2014
CPGI
COURT/
AGENCY
CASE TITLE
NATURE
Century Properties Group, Inc. vs. Eagle I Landholdings, Inc., et al.
RTC 66 Makati
Petition for Interim Measures for
Protection
Remegio Habana v. CPGI, Bernardo Tadeja, Jr., Tadeja Transport and
Tadeja Company
NLRC
Illegal dismissal with money claims
and damages
Enrique Yuson, Jr. v. CPGI, CPI, et. al.
NLRC
Illegal dismissal with money claims
and damages
AlenaRebmann vs. CPGI, et al.
RTC MAKATI
Sum of Money
CPGI vs. Michael Francis Oyao
OCP, Makati
Violation of E-Commerce Law
Carlo Jan Mendoza Centeno vs. CPI/CPGI, et al.
NLRC QC
Actual Illegal Dismissal and Money
Claims
Michael Francis O. Oyao vs. CPGI, et al.
NLRC
Illegal Dismissal and Money Claims
CLC
COURT/
AGENCY
CASE TITLE
NATURE
Noah’s Ark Group of Companies, et al. vs. UCPB, Century Limitless
Corporation and Century Properties, Inc.
RTC 212 Mandaluyong
Petition for Declaratory Relief
Columbian Motors Group vs. Emmanuel G. Victoria, et al.
RTC 276 Paranaque
Cancellation of Adverse Claim
Luningning Blum vs. CLC
HLURB QC
Refund
Keng Yen Lim and Winace M. Ogaya v. CLC et. al.
HLURB
Refund with damages
53
•
Case relevant to CALC:
Case Title/Court
Date Filed
Nature
Synopsis and Update
Noah’s Ark Group of Companies,
et al. vs. UCPB, Century Limitless
Corporation and Century Properties, Inc. – RTC 212 Mandaluyong
May 2014
Petition for Declaratory
Relief – This case was
filed by Noah’s Ark
seeking the judicial
interpretation of the
documents concerning
the property where Acqua project is currently
located and, in effect,
seeking that the titles of
CLC be declared void
and the titles be reverted
to Noah’s Ark/Jimmy
Go.
Century Limitless Corporation, on 16 July 2007, entered into a
Memorandum of Agreement with Contract to Sell with UCPB for a
consideration in the amount of Three Hundred Fifteen Million
Pesos (PhP 315,000,000.00).
In 2009, Go again filed a complaint for declaration of nullity of the
contract between CLC and UCPB. After due proceedings, the
Regional Trial Court, the Court of Appeals and finally the Supreme
Court ruled against Go.
In 2014, Go has once again filed another case involving the properties covered by the now TCT No. 21106 still claiming ownership
thereof in spite of the transfer/consolidation of its ownership to
UCPB and despite the countless times that our courts has rejected/rebuffed his invalid pleas. Clearly, the latest case filed by
Go docketed as Civil Case No. MC-14-8935 with the Regional
Trial Court of Mandaluyong, Branch 212 is merely a rehash of
previously settled issues in the favor of UCPB and Century. It is
worth noting that the present case, Civil Case No. MC-14-8935, is
a Petition for Declaratory Relief filed pursuant to Rule 63 of the
Revised Rules of Court.
Case Update:
Submitted for Resolution.
CLC vs. Jimmy T. Go a.k.a.
Jaime T. Gaisano and Atty.
Dinna P. Mantuano-Lao, in her
capacity as the Register of
Deeds of Mandaluyong City,
RTC 213 Mandaluyong
April 2015
Injunction with Prayer
for TRO and WPI – This
case was filed by CLC
against Jimmy Go seeking to enjoin Go from
filing frivolous cases/
claims before various
courts and agencies.
A Complaint for Injunction with Prayer for TRO and WPI was
filed by CLC on 16 April 2015 against Jimmy Go alleging that the
latter had filed numerous frivolous cases before various courts in
Metro Manila and attempting to use the cases to annotate an adverse claim and lispendens over the titles of CLC (the subject
“Acqua Project”).
CLC averred that a second adverse claim is prohibited under the
law and that the defendant has failed to utilize his procedural rights
in respect of his annotation of lispendens. Thus, he can already be
barred from applying for an annotation of his adverse claim and
notices of lispendens.
The Complaint alleged that the defendant had previously obtained
a court decision that he has a right to annotate his adverse claim
over the subject Properties then under the name of its original
owner, Alberto Looyuko. However, he only attempted to annotate
his adverse claim in 2014. Under Sec. 70 of PD 1529, a second
adverse claim is prohibited.
Subsequently, he filed several cases concerning the mortgage of
the subject Properties by Looyuko to UCPB, UCPB’s foreclosure,
and its eventual transfer to CLC. These cases were separately filed
with the Regional Trial Courts of Makati, Pasig and Mandaluyong
and which were elevated to the Court of Appeals and the Supreme
Court. Most of the cases were dismissed.
Case Update:
Finding the allegations of CLC to have established the company’s
clear and unmistakable right to the provisional relief, the Court
issued on 27 April 2015 a 20-day temporary restraining order
against the defendants.
After the hearing set on 18 May 2015, the Court issued its Order
dated 19 May 2015 granting CLC’s prayer for a writ of preliminary injunction which enjoins both defendants indefinitely
from causing any annotation on the titles of CLC.
On June 4, 2015, Go filed a Manifestation with Motion for Reconsideration of the Orders dated May 18 and 19, Motion for Nullification of Proceedings and Motion for Suspension of further Proceedings Ad Cautelam. The court has yet to set a hearing on these
motions.
54
MATERIAL AGREEMENTS
•
Hotel Management Agreement with S&P Inc (ACCOR)
On May 8, 2014, Century Limitless Corporation and S&P Inc. entered into an agreement for the appointment ofthe latter to operate and manage Novotel Suites Manila at Acqua. S&P Inc. shall determine all policies and procedures for the operation of the hotel. Also, the Operator is expected to
submit a draft business plan at least 60 days before each Fiscal Year commences, containing reasonable financial estimates for the ensuing Fiscal Year, sales and marketing plan and staff training program and expenditure. Agreement will expire on the 12th Anniversary of the Opening Date or the
date of expiry of any further term if such term is mutually agreed. The parties may mutually agree in
writing to two further terms each of five years.
•
Hotel Consultancy Services Agreement with S&P Inc (ACCOR)
Century Limitless Corporation appoints S&P Inc. as Hotel Consultant to provide advisory services
aimed at optimizing functionality and compliance with Brand Standards. Part of the services S&P
Inc. will provide include:
a.
b.
c.
d.
e.
•
Assistance in preparing Project Brief
Assistance in appointing consultants and establishing the scope of their duties
Supply of the Accor Group’s Brand Standards (design, construction, equipment)
Review and comment on the plans and specifications
Advise on the procurement strategy and selection of suppliers (excluding Furniture, Fixtures and Equipment)
Club Affiliation Agreement with Interval International Inc(Agreement is still for signature)
CALC is on the process of securing an agreement with Interval International Inc to provide resort
membership in the Interval Exchange Network to Preferred Shareholders of the club at participating
resorts in different parts of the world. The agreement will be for a period of 10 years from the Effective Date.
•
Contract To Sell between CLC and CALC on 152 Units
On January 23, 2015 CALC executed in favor of CLC a Contract to Sell for the purchase of 152
units of the Acqua 6 Tower. The purchase price of the PROPERTIES shall be One Billion Seventy
Five Million One Hundred Twelve Thousand Nine Hundred Ninety Pesos (Php
1,075,112,990.00), Philippine Currency (hereinafter referred to as the "Purchase Price"), to be paid
to the VENDOR in accordance with the periods and manner set forth below:
•
•
•
•
5% of the purchase price or PHP53,755,649.50 shall be paid within 150 days from signing
of the Contract
10% of the purchase price or PHP107,511,299.00 shall be paid on or before the first year
anniversary
15% % of the purchase price or PHP161,266,948.50 shall be paid on or before the second
year anniversary
70% % of the purchase price or PHP752,579,093.00 shall be paid on or before the third year
anniversary
55
•
Commitment Letter from Standard Chartered Bank
On April 27, 2015, Standard Chartered Bank (“SCB”) a Commitment letter confirming the approval
of a Secured Transferable 5-Year Term Loan Facility of up to One Billion Philippine Pesos
(PHP1,000,000,000.00) to finance its Acqua 6 project located at Coronado St., Barangay Hulo,
Mandaluyong City, Philippines. SCB’s Commitment is subject to certain terms and conditions including, among other things, satisfactory due diligence, the completion of KYC checks, the execution of financing documents and satisfaction of conditions precedent in form and substance satisfactory to SCB. These terms and conditions may be modified or supplemented in SCB’s sole discretion at any time and from time to time during the course of its due diligence and credit approval
process or as a result of market conditions or otherwise. The Credit Facility Agreement and all other relevant documents in relation to this approved facility will be submitted to the SEC within three
months hereof.
•
Escrow Agreement
An Escrow Agreement has been executed between CALC, CLC and Banco de Oro as the Escrow
Agent on May 20, 2015.
The Salient features of the agreement are the following:
1. The CALC shall deposit in escrow with the ESCROW AGENT, at the latter’s principal
office and during banking hours, the Escrow Amount totalling PESOS: One Billion Seventy
Five Million One Hundred Twelve Thousand Nine Hundred Ninety Pesos (Php
1,075,112,990.00).
2. The Escrow Amount shall come from the investments paid out by the BUYER’s
preferred shareholders and shall be deposited to the Escrow Account as soon as the
investment is received by the BUYER.
3. The ESCROW AGENT shall release the Escrow Amount to the SELLER within five (5)
banking days from the fulfillment of the following conditions:
a.
Receipt by the ESC ROW AGENT of a Letter of Instruction from the
SELLER and the BUYER directing the ESCROW AGENT to release
the Escrow Amount to the SELLER in accordance with the following
payment schedule:
•
5% of the purchase price or PHP53,755,649.50 shall be paid within 150
days from signing of the Contract
• 10% of the purchase price or PHP107,511,299.00 shall be paid on or before
the first year anniversary
• 15% % of the purchase price or PHP161,266,948.50 shall be paid on or before the second year anniversary
• 70% % of the purchase price or PHP752,579,093.00 shall be paid on or before the third year anniversary
56
PROPERTIES
As of date, the Company does not own any property. It has however executed a Contract to Sell in
favor of CLC for the purchase of 152 units of the Acqua 6 Tower. The 152 condominium units of the Acqua
6 Tower is part of CLC’s Acqua Private Residences development, a magnificent multi-tower master-planned
development on a 2.4-hectare prime property, rising right on the waterfront at a point where Mandaluyong
City meets Makati City. It is composed of 6 towers – Niagara, Sutherland, Dettifoss, Livingstone, Iguazu and
Acqua 6 Tower. The development has a view of the dazzling Makati skyscrapers across the bridge. It is accessible via the Makati-Mandaluyong Bridge and is also connected to the Makati Central Business District
via the newly constructed Estrella-Pantaleon bridge.
The Acqua 6 Tower is covered by Transfer certificate of Title No. 008-2011000715 located at Matamis St., Barangay Hulo, Mandaluyong City. An Environmental Compliance Certificate has been issued by
the Environmental Management Bureau, National Capital Region in relation to the Project on September 28,
2010 under ECC Ref. Code: ECC-NCR-1009-0324.
CLC undertakes to submit to the SEC copies of the pertinent Condominium Certificates of Title of
the 152 Units within ninety (90) days from the release of the subdivided titles of Acqua 6 by the Register of
Deeds of Mandaluyong
The Acqua 6 Tower is the sixth building within the integrated urban residential development, which
will house 310 Hotel Suites and 149 branded residential units. Of the 310 Hotel Suites, 152 will be owned by
the Company while the remaining 158 units will remain with CLC. The 149 residential units will be sold by
CLC as retail units. The Acqua 6 Tower will be a dedicated hospitality project to be managed by Novotel
Suites, Manila. Please see discussion on the property under “The Acqua 6 Tower” beginning on page 11 of
this Prospectus. The Acqua 6 Tower will be fully financed by CLC’s credit facility from a reputable bank in
the Philippines.
57
INDUSTRY
The information set out in this section “Industry” has been extracted from publicly available reports from
Bill Barnet of C9 Hotelworks and the Philippine DOT.
HOTEL INDUSTRY
The total international visitors to the Philippines registered at 4.2 million in 2012, a 9% growth versus 2011.
An upward trend has continued in 2013. For the year to date figures up to August this year, the number of
international travelers grew at 11% over the same period versus 2012. The Philippine Tourism Authority is
targeting continued growth as global exposure opens up new markets. It is anticipated that 2014 arrival will
grow by a further 15% with a target to reach 10 million by 2020.
Top five source markets consisted of Korea (26%), U.S.A (14%), Japan (9%), China (9%) and Australia
(4%). Two key growth markets, China and Korea, recorded a year on year increase at 61% and 22%,
respectively.
In 2012, the city of Manila and region welcomed 974,379 overnight visitors. As the main gateway to the
Philippines' many destinations, the majority of international tourists visit the city to the country registering a
total of 3,139,756 arrivals in 2012. The city is ranked tenth at 72.9% in MasterCard's global top 20 fastest
growing cities for international visitors from 2009-2013.
By 2017 the Manila hotel supply is anticipated to add over 6,000 new rooms, signifying a growth of almost
30% to meet the current demands. Given the fact that overall tourist arrivals are still low when compared to
its peers such as Thailand, Indonesia and Malaysia, current focus is generating more demand, not only for
Manila, but onward travel to other Philippine destinations such as Cebu, Bohol, Palawan and Boracay.
The new supply growth is largely limited to the extensive development around the Integrated Resorts in
Manila Bay, whereas growth in the prime CBDs are slow and very limited. In fact, for 2014 and 2015 we
see a negative growth as a number of prime hotels will close for redevelopment.
Existing hotel supply is heavily geared to the Upscale and Luxury Sectors of the market. Whereas, global
demand drivers are clear that the current “Millennial’s” are demanding better value hotels with more flexible
and customized experiences. The charts below clearly demonstrate the supply weakness in the mid-market
hotel sector, hence the selection of Novotel Suites and our brand and operator for Acqua 6. Novotel is one of
the leading mid market experiential hotels in Asia and worldwide.
58
Furthermore the demand for serviced apartments and limited serviced hotels has grown dramatically in the
last 10 years fuelled by gradually improving product knowledge, understanding of the benefits of serviced
apartments amongst corporate clients, improving standards of apartment and the arrival of major brands into
the sector.
94% of operators report that demand for serviced apartments in their region is increasing linked to demands
for more independent FITed by gradually improving product knowledge, understanding of the self-contained
limited service rooms, but still offering recognized brands and high levels product quality.
Growth in demand has also been fuelled by the global economic recession, particularly amongst corporates
who have turned to serviced apartments as a cost-effective alternative to long-term hotel stays. Demand is
being further fuelled by the growth in project and assignment work. Ernst & Young 2012 Global Mobility
Study predicts that long term and short term assignments will increase by 11% and 20% respectively over
the next 2 years.
The table below summarizes the 2014 YTD Occupancy and Average Daily Rates for the core branded
competitive set Serviced Apartment properties in Manila, together with the projections for Novotel Suites.
59
REGULATORY AND ENVIRONMENTAL MATTERS
ENVIRONMENTAL LAWS
Development projects that are classified by law as environmentally critical or projects within statutorily defined environmentally critical areas are required to obtain ECC prior to commencement. The DENR, through
its regional offices or through the Environmental Management Bureau (“EMB”), determines whether a
project is environmentally critical or located in an environmentally critical area. As a requisite for the issuance of an ECC, an environmentally critical project is required to submit an Environmental Impact Statement (“EIS”) to the EMB while a project in an environmentally critical area are generally required to submit
an Initial Environmental Examination (“IEE”) to the proper DENR regional office. In case of an environmentally critical project within an environmentally critical area, an EIS is required. The construction of major roads and bridges are considered environmentally critical projects for which EISs and ECCs are mandated.
The EIS refers to both the document and the study of a project’s environmental impact, including a discussion of the scoping agreement identifying critical issues and concerns as validated by the EMB, environmental risk assessment if determined necessary by EMB during the scoping, environmental management program, direct and indirect consequences to human welfare and ecological as well as environmental integrity.
The IEE refers to the document and the study describing the environmental impact, including mitigation and
enhancement measures, for projects in environmentally critical areas.
While the EIS or an IEE may vary from project to project, as a minimum, it contains all relevant information
regarding the projects’ environmental effects. The entire process of organization, administration and assessment of the effects of any project on the quality of the physical, biological and socio-economic environment
as well as the design of appropriate preventive, mitigating and enhancement measures is known as the EIS
System. The EIS System successfully culminates in the issuance of an ECC. The ECC is a Government certification, that the proposed project or undertaking will not cause a significant negative environmental impact,
that the proponent has complied with all the requirements of the EIS System and that the proponent is committed to implement its approved Environmental Management Plan in the EIS or, if an IEE was required,
that it shall comply with the mitigation measures provided therein before or during the operations of the
project and in some cases, during the project’s abandonment phase. The ECC also provides for other terms
and conditions, any violation of which would result in a fine or the cancellation of the ECC.
Project proponents that prepare an EIS are required to establish an Environmental Guarantee Fund (“EGF”)
when the ECC is issued to projects determined by the DENR to pose a significant public risk to life, health,
property and the environment. The EGF is intended to answer for damages caused by such a project as well
as any rehabilitation and restoration measures. Project proponents that prepare an EIS are mandated to include a commitment to establish an Environmental Monitoring Fund (“EMF”) when an ECC is eventually
issued. The EMF shall be used to support the activities of a multi-partite monitoring team which will be organized to monitor compliance with the ECC and applicable laws, rules and regulations.
All development projects, installations and activities that discharge liquid waste into and pose a threat to the
environment of the Laguna de Bay Region are also required to obtain a discharge permit from the Laguna
Lake Development Authority.
The Company is compliant and incurs expenses for the purposes of complying with environmental laws that
consist primarily of payments for Government regulatory fees. Such fees are standard in the industry and are
minimal.
60
NATIONALITY RESTRICTIONS
The Philippine Constitution limits ownership of land in the Philippines to Filipino citizens or to corporations
the outstanding capital stock of which is at least 60% owned by Philippine Nationals. While the Philippine
Constitution prescribes nationality restrictions on land ownership, there is generally no prohibition against
foreigners owning building and other permanent structures. However, with respect to condominium developments, the foreign ownership of units in such developments is limited to 40%.
Republic Act No. 7042, as amended, otherwise known as the Foreign Investments Act of 1991, and the
Ninth Regular Foreign Investment Negative List, provide that certain activities are nationalized or partlynationalized, such that the operation and/or ownership thereof are wholly or partially reserved for Filipinos.
Under these regulations, and in accordance with the Philippine Constitution, ownership of private lands is
partly-nationalized and thus, landholding companies may only have a maximum of 40% foreign equity. The
Company does not currently own real estate.
Republic Act No. 4726, as amended or the Philippine Condominium Act does not prohibit ownership of
condominium units by foreigners. It expressly allows foreigners to acquire condominium units and shares in
condominium corporations up to not more than 40% of the total and outstanding capital stock of a Filipinoowned or controlled corporation. Under the Condominium Act, there is a legal separation of the ownership
of the land from the condominium unit itself. The land is owned by the Condominium Corporation while the
unit is owned by the individual buyers of the condominium units. As long as 60% of the members of the
Condominium Corporation are Filipino, the remaining members can be foreigners.
The term “Philippine National” as defined under the R.A. No. 7042, as amended, shall mean a citizen of the
Philippines, a domestic partnership or association wholly-owned by citizens of the Philippines or a corporation organized under the laws of the Philippines of which at least 60.0% of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines, or a corporation organized abroad and registered to do business in the Philippines under the Philippine Corporation Code of which 60% of the capital
stock outstanding and entitled to vote is wholly-owned by Filipinos or a trustee of funds for pension or other
employee retirement or separation benefits, where the trustee is a Philippine National and at least 60% of the
fund will accrue to the benefit of Philippine Nationals.
61
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
BOARD OF DIRECTORS AND KEY OFFICERS
As of 15 June 2015, the members of the Board of Directors and the key Officers of the Company are:
Name
Position
Nationality
Timothy Hallett
Chairman
British
Member and President
Filipino
Isabelita C. Sales
Member and Compliance Officer
Filipino
Domie S. Eduvane
Member and Corporate Secretary
Filipino
Rhoel Alberto C. Nolido
Member and Treasurer
Filipino
Riza V. Tumale
Independent Director
Filipino
Ma. Pamela D. Quizon-Labayen
Independent Director
Filipino
Timothy Hallett, British, 55, Chief Operating Officer of Century Properties Hospitality and Chairman of
CALC, has more than 30 years hospitality business experience in UK and Asia and has developed, preopened and operated multiple international hotels and golf resorts worldwide.
He started his career with Europe’s leading golf & leisure operator, the Marriott Country Club Hotels and
then was part of PGA Golf Management in UK and Asia. His career continued with CCA International in
Hong Kong where he oversaw the development of their Asian golf business and managed their 5-Star Club
in Guangzhou, China. Prior to joining Alila Hotels & Resorts, Tim was Managing Director of Palm Resort
Bhd the Hotel & Leisure business of AFP Land a division of Indonesia Sin Mas Group. Post this, Tim has
create a number a key businesses and brands in the hotel and hospitality real estate private equity space including Zinc Hospitality, Cosi Hotels and Silverneedle Hospitality before joining Century Properties Group
to create and roll out multiple Hotel and Hospitality Real Estate projects in the Philippines.
Carlos Benedict K. Rivilla IV, Filipino, 43 , is the President of the Company concurrently he serves as the
Assistant Corporate Secretary and Vice President for Corporate Affairs of Century Properties Group, Inc.
(CPGI) since 2011. As part of his experience in the business sector, he served as Director for Century Properties Worldwide Services Companies in the United Kingdom, Italy and Germany from 2012-2013.
Prior to joining Century, he served as Executive Vice President and Compliance Officer for a Business
Processing Outsourcing Company from 2004-2006 and was Managing Director of CCP Company Services
and worked with Corporate Counsels, Philippines Law Offices from 1998-2005 where as part of his employment he served as Director and Corporate Secretary to various corporations, he also served as Corporate
Compliance Office and Vice President for Finance in a corporation engaged in mass media from 1993-1997
in Cebu City. Mr. Rivilla is a graduate of University of San Jose Recoletos.
62
Isabelita C. Sales, Filipino, 35 serves as the Century Properties Group Inc.’s Chief Information Officer.
Prior to her stint with CPGI, Atty. Ching-Sales was the Chief Legal Counsel, Head for Credit Support, Chief
Information Officer and Corporate Secretary of Asiatrust Development Bank where she worked for 5 years.
She likewise worked as Head for Operations of China Banking Corporation’s Acquired Assets Division prior
to her joining Asiatrust. She attended various trainings on Corporate Governance, Compliance, Land Registration, Disputes Resolution, Credit and Collection Procedures, both here and abroad. She graduated from the
University of Sto. Tomas with a Bachelor’s Degree in Legal Management and obtained her degree in Bachelor of Laws at San Sebastian College Recoletos Manila, Institute of Law and San Beda College of Law, Manila.
Domie S. Eduvane, Filipino, 49 is the Senior Vice-President for Legal and Corporate Affairs of the CPGI.
He graduated magna cum laude from Far Eastern University, Manila with a Bachelor of Arts Degree in Economics and obtained his law degree from San Beda College of Law, Manila in 1994. Prior to joining the
Company, he served as the Vice-President for Legal and Corporate Affairs and Human Resources for Empire
East Properties, Inc., an affiliate of Megaworld Corporation. He also worked as Court Attorney with the
Court of Appeals, Manila and was an Associate with Bengzon Zarraga Cudala Liwanag& Jimenez Law Offices as well as a Partner of Yrreverre Rondario& Associates Law Office.
Rhoel Alberto C. Nolido, Filipino, 41 years old, is the Business Unit Head of CPGI. He has been in the real
estate industry for the past 18 years. Mr. Nolido first started at Ayala Land, Inc. where he worked for 10
years handling project development. He eventually moved on as General Manager of Northpine Land for 5
years before he transferred to Eton Properties as a Senior Vice President for Business Management. He
graduated from Ateneo de Manila University with a Bachelor of Science in Management degree and later
took his MBA in Asian Institute of Management, Major in Finance.
RIZA V. TUMALE, Filipino, 41 years old, is a corporate lawyer and a financial advisor for Philam Life. Atty. Tumale is a legal consultant and corporate secretary of a number of corporations. She is also a project
attorney for Baer Reed, a legal process outsourcing company. She once worked with Corporate Counsels,
Philippines Law Offices where as part of her employment she served as Corporate Secretary and Compliance
Officer of various corporations. Atty. Tumale was admitted to the Philippine Bar in May 1999. She obtained
both her undergraduate and Juris Doctor degrees from the Ateneo de Manila University.
MA. PAMELA BARBARA D. QUIZON- LABAYEN, Filipino, 41 years old, is the concurrent Compliance
Officer of AstraZeneca Pharmaceuticals (Phils.), Inc. and AstraZeneca (Thailand) Ltd. since 2010 for the
Philippines and concurrently with Thailand since March 2015, responsible for the governance and compliance framework for both countries. Prior to joining AstraZeneca, she was an Associate Lawyer for Quisumbing Torres (Baker & McKenzie Philippines) from 2005-2008, and was Head of the Disclosure Department of the Philippine Stock Exchange, Inc. from 2002-2005 where she was involved in the review, investigation, and approval of disclosure submissions of all listed companies on the PSE. She was also an Associate
Lawyer for Ongkiko Kalaw Manhit & Acorda Law Offices, engaged in civil, corporate and criminal cases. Ms. Labayen is a graduate of Ateneo de Manila University with a Bachelor of Science degree in Legal
Management and earned her Juris Doctor degree from the same University.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS OF DIRECTORS AND EXECUTIVE
OFFICERS
None of the Company’s directors, nominees for election as director, or executive officers have in the fiveyear period prior to the date of this Prospectus: (1) had any petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the bankruptcy or within a twoyear period of that time, (2) have been convicted by final judgment in a criminal proceeding, domestic or
foreign, or have been subjected to a pending judicial proceeding of a criminal nature, domestic or foreign,
63
excluding traffic violations and other minor offenses, (3) have been the subject of any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or
foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement
in any type of business, securities, commodities or banking activities, or (4) have been found by a domestic
or foreign court of competent jurisdiction (in a civil action), the SEC or comparable foreign body, or a domestic or foreign exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation, such judgment having not been reversed, suspended, or
vacated.
CORPORATE GOVERNANCE
The Company adopted its Manual on Corporate Governance on November 17, 2014.
COMMITTEES OF THE BOARD
The Board created and appointed Board members to each of the committees set forth below. Each member of
the respective committees named below holds office as of the date of this Prospectus and will serve until his
successor is elected and qualified.
Audit and Risk Committee
-
Chairman of the Committee
Riza V. Tumale
-
Member
Ma. Pamela Quizon-Labayen
-
Member
Nomination and Compensation Committee
Rhoel Alberto B. Nolido
-
Isabelita C. Sales
-
Member
Rhoel Alberto Nolido
-
Member
Domie S. Eduvane
-
Isabelita C. Sales
-
Member
-
Member
Timothy Hallett
-
Carlos Benedict K. Rivilla
-
Member
-
Member
Corporate Governance Committee
Investment Committee
64
EXECUTIVE COMPENSATION SUMMARY
Compensation
The following are the Company’s President and four most highly compensated officers for the period ended
December 31, 2014:
Name
Position
Timothy Hallett
Isabelita C. Sales
Domie S. Eduvane
Chairman
Member and President
Member and Compliance Officer
Member and Corporate Secretary
The following table identifies and summarizes the expected aggregate compensation of the Company’s President and CEO and the four most highly compensated officers of the Company in 2015:
Year
Total
(₱)
President and the four most highly compensated officers
named above .....................................................................
2015
4,800,000
2015
1,200,000
Aggregate compensation paid to all other officers as a
group unnamed .................................................................
Directors Per Diem
A per diem of P 2,000 to 10,000 shall be paid per Director for every meeting of the Board of Directors and P
2,000 to 10,000 per Director for every Committee meeting.
FAMILY RELATIONSHIPS
There are no known family relationships between the current members of the Board of Directors and key
officers.
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EMPLOYMENT CONTRACTS
The Company has executed pro-forma employment contracts with its Officers. These contracts basically
specify the scope of services expected from these individuals and the compensation that they shall receive.
There are no arrangements for compensation to be received by these named executive officers from the
Company in the event of a change in control.
The Company has employed its officers and sales personnel to date, there are no other employees contracted
as it anticipates its operations upon the approval of this Offer. The Company undertakes to disclose to the
SEC the specific number of employees it shall contract or anticipate to contract within the ensuing twelve
(12) months, as soon as this information becomes available.
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PRINCIPAL SHAREHOLDERS
Principal Shareholders
The following table sets forth the holders of the Company’s shares as of 15 June 2015.
Title of
Class
Name, address of Record
Owner and Relationship
with Issuer
Name of Beneficial Owner and
Relationship with
Record Owner
Citizenship
No. of
Shares
Held
Percent of
outstanding
Shares
Common
CENTURY LIMITLESS
CORPORATION
21F Pacific Star Building
Makati Ave., Makati City
Beneficial Owner
Filipino
24,999,993
99.99%
Parent Company of the Issuer
Mr. Rafael G. Yaptinchay, Treasurer and Director of CLC has been authorized to vote for and represent the
shares of CLC.
Security Ownership of Certain Record and Beneficial Owners and Management
The following table illustrates the security ownership of certain record and beneficial owners (of more than
5%) as of 15 June 2015.
Title of
Class
with Issuer
Relationship with
Record Owner
Citizenship
No. of Shares
Held
Percent of
outstanding Shares
Common
CENTURY LIMITLESS
CORPORATION
Beneficial Owner
Filipino
24,999,993
99.99%
Parent Company of the Issuer
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Beneficial Ownership of Century Limitless Corporation
Title of
Class
Common
with Issuer
Relationship with
Record Owner
CENTURY PROPERTIES Beneficial Owner
GROUP, INC.
Citizenship
Filipino
No. of Shares
Held
Percent of
outstanding Shares
16,089,995
99.99%
Parent Company of CLC
The following table illustrates the security ownership of certain record and beneficial owners (of more than
The following table illustrates the security ownership of directors and management as of 15 June 2015.
Title of
Class
Name of Beneficial Owner
Amount and Nature of Beneficial Ownership
Citizenship
Percent of
All Class
Directors and Officers
Common
Timothy Hallett
1
direct
British
0.0000%
Common
1
direct
Filipino
0.0000%
Common
Isabelita C. Sales
1
direct
Filipino
0.0000%
Common
Domie S. Eduvane
1
direct
Filipino
0.0000%
Common
Rhoel Alberto C. Nolido
1
direct
Filipino
0.0000%
Common
Riza V. Tumale
1
direct
Filipino
0.0000%
Common
Ma. Pamela Quizon-Labayen
1
direct
Filipino
0.0000%
All Directors and Officers as a group
7
0.0000%
None of the members of the Company’s directors and management owns 2.0% or more of the outstanding
capital stock of the Company.
The Company knows of no person holding more than 5% of common shares under a voting trust or similar
agreement.
No change of control in the Company has occurred since the beginning of its last fiscal year.
As of 15 June 2015, 0.0000% of the Company’s Preferred Shares are owned by the public.
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CHANGE IN CONTROL
As of the date of this Prospectus, there are no arrangements which may result in a change in control of the
Company.
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RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties
are also considered to be related if they are subject to common control or common significant influence
which include affiliates. Related parties may be individuals or corporate entities.
As of January 23, 2015, the Company acquired the one hundred fifty (152) Condominium Units of Acqua 6
Tower of the Acqua Private Residences from its parent company, CLC. The transaction between the Company and CLC are arms-length and are entered into on terms comparable to those available from unrelated
third parties.
Upon the completion and turnover of the condominium units, the Company will appoint CPHLI to manage
the 152 condominium units and undertake all communications with the Preferred Shareholders and the Property Manager
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DESCRIPTION OF THE SHARES
The shares to be offered shall be Preferred Shares of the Company.
Pursuant to its articles of incorporation, the company has an authorized capital stock of P 100,000,000.00
divided into (i) 94,164,560.00 Common Shares with a par value of P 1.00 per share; (ii) 6,344 Class A
Shares with a par value of P 10.00 per share or aggregate amount of P 63,440; (iii) 520 Class B Shares with a
par value of P 100.00 per share or aggregate amount of P 52,000; (iv) 520 Class C Shares with a par value of
P 1,000.00 per share or aggregate amount of P 520,000; and (v) 520 Class D Shares with a par value of P
10,000.00 per share or aggregate amount of P 5,200,000. Out of the Authorized Capital Stock, 25,000,000
Common Shares are outstanding as of the date of this Prospectus. The Offer Shares are the Class A, B, C
and D Shares of the Company.
The Offer Shares subscription shall be a minimum of thirteen (13) preferred shares and in multiple of thirteen (13) shares thereafter (“Board Lot”).
The Offer Shares will be offered at the following prices (i) up to ₱166,667 per Preferred Class A Share or
P2,166,671 per board lot; (ii) up to ₱238,889per Preferred Class B Share or P3,105,557 per board lot; (iii) up
to ₱383,333 per Preferred Class C Share or P4,983,329 per board lot; and (iv) up to ₱444,444 per Preferred
Class D Share or P5, 777,772 per board lot.
The determination of the Offer Price is further discussed on page 40 of this Prospectus. Assuming full subscription of the Offer Shares total of up to 6,344Preferred Class A Shares, 520 Preferred Class B Shares, 520
Preferred Class C Shares and 520 Preferred Class D Shares will be outstanding after the Offer.
Objects and Purposes
The Company has been organized primarily to purchase, own, hold, manage, administer, lease or operate the
152 condominium units of the Acqua 6 Tower of the Acqua Private Residences for the benefit of its shareholders.
Share Capital
A Philippine corporation may issue common or preferred shares, or such other classes of shares with such
rights, privileges or restrictions as may be provided for in the articles of incorporation and by-laws of the
corporation. Subject to the approval by the Philippine SEC, it may increase or decrease its authorized capital
stock by amending its articles of incorporation, provided that the change is approved by a majority of the
board of directors and by shareholders representing at least two-thirds of the outstanding capital stock of the
corporation voting at a shareholders’ meeting duly called for the purpose.
Under Philippine law, the shares of a corporation may either be with or without a par value. The Preferred
Shares currently have the following par values: i) Class A Shares with a par value of P 10.00 per share; (ii)
Class B Shares with a par value of P 100.00 per share; (iii) Class C Shares with a par value of P 1,000.00 per
share; and (iv) Class D Shares with a par value of P 10,000.00 per share. In the case of par value shares,
where a corporation issues shares at a price above par, whether for cash or otherwise, the amount by which
the subscription price exceeds the par value is credited to an account designated as additional paid-in capital
or paid-in surplus.
Voting Rights
The Company’s Common Shares shall be entitled to vote and be voted for in all the meetings of the shareholders of the Corporation where such vote is called. The Preferred Shares are non- voting shares.
71
Dividend Rights
Under the Philippine Corporation Code, dividends may be paid out of the Unrestricted Retained Earnings of
the Company as and when the Board of Directors may elect, subject to legal requirements. The Common
Shares are entitled to dividends subject to the rules of the Corporation Code for its valid declaration while
Preferred Shares are not entitled to Dividends. The Preferred Shareholders, however, shall enjoy a preferred
return generated from a share of 40% of the Net Room Rental Revenue and shall no longer participate in any
dividend declaration of the Corporation thereafter.
Pre-Emptive Rights & Rights of First Refusal
The Philippine Corporation Code confers pre-emptive rights on the existing shareholders of a Philippine corporation which entitle such shareholders to subscribe to all issues or other dispositions of shares of any class
by the corporation in proportion to their respective shareholdings, regardless of whether the shares proposed
to be issued or otherwise disposed of are identical to the shares held. A Philippine corporation may, however,
provide for the denial of these pre-emptive rights in its articles of incorporation. Likewise, shareholders who
are entitled to such pre-emptive rights may waive the same through a written instrument to that effect.
The articles of incorporation of the Company deny the pre-emptive rights of its shareholders to purchase,
subscribe for or receive any part of the shares of the Corporation, whether issued from its unissued capital or
treasury stock.
The holders of the Common Shares have the right of first refusal over any disposition of any class of Preferred Shares and a Preferred Shareholder may not sell, transfer or otherwise dispose their Preferred Shares
until the same has been fully paid and first offered to the Common Shareholder.
Derivative Rights
Philippine law recognizes the right of a shareholder to institute proceedings on behalf of the corporation in a
derivative action in circumstances where the corporation itself is unable or unwilling to institute the necessary proceedings to redress wrongs committed against the corporation or to vindicate corporate rights as, for
example, where the directors of the corporation themselves are the malefactors.
Appraisal Rights
The Philippine Corporation Code grants a shareholder a right of appraisal and demand payment of the fair
value of his shares in certain circumstances where he has dissented and voted against a proposed corporate
action, including:
•
an amendment of the articles of incorporation which has the effect of adversely affecting the rights
attached to his shares or of authorizing preferences in any respect superior to those of outstanding
shares of any class,
•
the extension of the term of corporate existence,
•
the sale, lease, exchange, transfer, mortgage, pledge or other disposal of all or substantially all the
assets of the corporation,
•
a merger or consolidation, and
•
investment by the corporation of funds in any other corporation or business or for any purpose other
than the primary purpose for which it was organized.
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In any of these circumstances, the dissenting shareholder may require the corporation to purchase its shares
at a fair value, which, in default of agreement, is determined by three disinterested persons, one of whom
shall be named by the shareholder, one by the corporation, and the third by the two thus chosen. Regional
Trial Courts will, in the event of a dispute, determine any question about whether a dissenting shareholder is
entitled to this right of appraisal. From the time the shareholder makes a demand for payment until the corporation purchases such shares, all rights accruing on the shares, including voting and dividend rights, shall
be suspended, except the right of the shareholder to receive the fair value of such shares. No payment shall
be made to any dissenting shareholder unless the corporation has Unrestricted Retained Earnings sufficient
to support the purchase of the shares of the dissenting shareholders.
Right of Inspection
A shareholder has the right to inspect the records of all business transactions of the corporation and the minutes of any meeting of the board of directors and shareholders at reasonable hours on business days and
may demand a copy of excerpts from such records or minutes at his or her expense. However, the corporation may refuse such inspection if the shareholder demanding to examine or copy the corporation’s records
has improperly used any information secured through any prior examination, or was not acting in good faith
or for a legitimate purpose in making his demand.
Right to Financial Statements
A shareholder has a right to be furnished with the most recent financial statement of a Philippine corporation,
which shall include a balance sheet as of the end of the last taxable year and a profit or loss statement for
said taxable year, showing in reasonable detail its assets and liabilities and the results of its operations. At the
meeting of shareholders, the board of directors is required to present to the shareholders a financial report of
the operations of the corporation for the preceding year, which shall include financial statements duly signed
and certificate by an independent certified public accountant.
Board of Directors
Unless otherwise provided by law or in the articles of incorporation, the corporate powers of the Company
are exercised, its business conducted, and its property controlled by the Board. Pursuant to its articles of incorporation, as amended, the Company shall have 7 Directors, two of whom are independent Directors within the meaning set forth in Section 38 of the SRC. The Board shall be elected during each regular meeting of
shareholders, at which shareholders representing at least a majority of the issued and outstanding capital
shares of the Company are present, either in person or by proxy.
Under Philippine law, representation of foreign ownership on the Board is limited to the proportion of the
foreign shareholding. Directors may only act collectively, individual directors have no power as such. Four
directors, which is a majority of the Board, constitute a quorum for the transaction of corporate business.
Except for certain corporate actions such as the election of officers, which shall require the vote of a majority
of all the members of the Board, every decision of a majority of the quorum duly assembled as a board is
valid as a corporate act.
Any vacancy created by the death, resignation or removal of a director prior to expiration of such director’s
term shall be filled by a vote of at least a majority of the remaining members of the Board, if still constituting
a quorum, Otherwise, the vacancy must be filled by the shareholders at a meeting duly called for the purpose. Any director elected in this manner by the Board shall serve only for the unexpired term of the director
whom such director replaces and until his successor is duly elected and qualified.
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Shareholders’ Meetings
Annual or Regular Shareholders’ Meetings
The Philippine Corporation Code requires all Philippine corporations to hold an annual meeting of shareholders for corporate purposes including the election of directors. The By-laws of the Company provide for
annual meetings on any date of April of each year to be held at the principal office of the Company and at
such hour as specified in the notice.
Special Shareholders’ Meeting
Special meetings of shareholders, for any purpose or purposes, may at any time be called by either a majority
of the Board of Directors or at the request of shareholders representing one-third of the subscribed capital,.
Notice of Shareholders’ Meeting
Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date, and time of the meeting, and the purpose or purposes
for which the meeting is called. The Company’s By-laws provide that notices of the time and place of the
annual and special meetings of the shareholders shall be given either by mailing the same, addressed to each
shareholder of record at the address left by such shareholder with the Secretary of the Company, by delivering the same to him in person, or by sending electronically or by e-mail to each shareholder who have consented to receive notices, information, or documents in such form at least 2 weeks before the date set for
such meeting. Notice to any special meeting must state, among others, the matters to be taken up in the said
meeting, and no other business shall be transacted at such meeting except by consent of all the shareholders
present, entitled to vote. No notice of meeting need be published in any newspaper, except when necessary to
comply with the special requirements of the Philippine Corporation Code. Shareholders entitled to vote may,
by written consent, waive notice of the time, place, and purpose of any meeting of shareholders and any action taken at such meeting pursuant to such waiver shall be valid and binding. When the meeting of the
shareholders is adjourned to another time or place, notice of the adjourned meeting need not be provided so
long as the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken. At the reconvened meeting, any business may be transacted that might have been transacted on the original date of the meeting.
Quorum
Unless otherwise provided by law, in all regular or special meeting of shareholders, a majority of the outstanding capital shares must be present or represented in order to constitute a quorum, except in those cases
where the Philippine Corporation Code provides a greater percentage vis-à-vis the total outstanding capital
shares. If no quorum is constituted, the meeting shall be adjourned until the requisite amount of shares shall
be presented.
Pursuant to the Company’s By-laws, the President, or in case of his absence or disability, by a chairman to
be chosen by the stockholders, may then call to order any meeting of the shareholders, and proceed to the
transaction of business, provided a majority of the shares issued and outstanding be present, either in person
or by proxy, but if there be no quorum present at any meeting, the meeting may be adjourned by the shareholders present from time to time until the quorum shall be obtained. If neither the chairman nor the vice
chairman of the board is present, then the meeting is to be conducted by the president, and in case the latter
is also absent, by the senior director or by the oldest director, if several became directors on the same date.
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Voting
At all meetings of shareholders, a holder of Common Shares may vote in person or by proxy, for each share
held by such shareholder.
Matters Pertaining to Proxies
Shareholders may vote at all meetings the number of shares registered in their respective names, either in
person or by proxy duly given in writing and duly presented to the Corporate Secretary before or during the
meeting. Unless otherwise provided in the proxy, it shall be valid only for the meeting at which it has been
presented to the Corporate Secretary.
Proxies should comply with the relevant provisions of the Philippine Corporation Code, the SRC, the IRRs,
and Philippine SEC Memorandum Circular No. 5 (series of 1996) issued by the Philippine SEC.
Share Certificates
Certificates representing the Preferred Shares per class will be issued in denominations of 13 shares each.
The Preferred Shareholders may not split their certificates.
Mandatory Tender Offers
In general, under the SRC and the IRRs, any person or group of persons acting in concert and intending to
acquire at least (1) 35% of any class of any equity security of a public or listed corporation in a single transaction, or (2) 35% of such equity over a period of 12 months, or (3) even if less than 35% of such equity, if
such acquisition would result in ownership by the acquiring party of over 51% of the total outstanding equity, is required to make a tender offer to all the shareholders of the target corporation on the same terms. Generally, in the event that the securities tendered pursuant to such an offer exceed that which the acquiring person or group of persons is willing to take up, the securities shall be purchased from each tendering shareholder on a pro rata basis, disregarding fractions, according to the number of securities tendered by each security holder. Where a mandatory tender offer is required, the acquirer is compelled to offer the highest price
paid by him for such shares during the past six months. Where the offer involves payment by transfer or allotment of securities, such securities must be valued on an equitable basis. However, if any acquisition of
even less than 35% would result in ownership of over 51% of the total outstanding equity, the acquirer shall
be required to make a tender offer for all the outstanding equity securities to all remaining shareholders of
the said corporation at a price supported by a fairness opinion provided by an independent financial adviser
or equivalent third party. The acquirer in such a tender offer shall be required to accept any and all securities
thus tendered.
No Mandatory Tender Offer is required in: (i) purchases of shares from unissued capital shares unless it will
result to a 50% or more ownership of shares by the purchaser, (ii) purchases from an increase in the authorized capital shares of the target company, (iii) purchases in connection with a foreclosure proceedings involving a pledge or security where the acquisition is made by the debtor or creditor, (iv) purchases in connection with privatization undertaken by the government of the Philippines, (v) purchases in connection with
corporate rehabilitation under court supervision, (vi) purchases through an open market at the prevailing
market price, or (vii) purchases resulting from a merger or consolidation.
Fundamental Matters
The Philippine Corporation Code provides that certain significant acts may only be implemented with shareholders’ approval. The Preferred Shareholders, although non-voting shares, are nevertheless entitled to vote
on the following fundamental matters which shall require the approval of shareholders representing at least
two-thirds of the total issued and outstanding capital shares of the corporation in a meeting duly called for
the purpose:
75
•
amendment of the articles of incorporation;
•
adoption and amendment of by-laws;
•
sale, lease, exchange, mortgage, pledge or other disposition of all or a substantially all of the corporate property;
•
incurring, creating or increasing bonded indebtedness;
•
increase or decrease of capital stock;
•
merger or consolidation of the corporation with anther corporation or other corporations;
•
investment of corporate funds in any other corporation or business or for any purpose other than the
primary purpose for which the corporation was organized; and
•
dissolution of the corporation
The approval of shareholders holding a majority of the outstanding capital shares of a Philippine corporation,
including non-voting preferred shares, is required for the adoption or amendment of the by-laws of such corporation.
Accounting and Auditing Requirements
Philippine stock corporations are required to file copies of their annual financial statements with the Philippine SEC. In addition, public corporations are required to file quarterly financial statements (for the first
three quarters) with the Philippine SEC. Shareholders are entitled to request copies of the most recent financial statements of the corporation which include a statement of financial position as of the end of the most
recent tax year and a profit and loss statement for that year. Shareholders are also entitled to inspect and examine the books and records that the corporation is required by law to maintain.
The Board is required to present to shareholders at every annual meeting a financial report of the operations
of the Company for the preceding year. This report is required to include audited financial statements.
76
INTERESTS OF NAMED EXPERTS
LEGAL MATTERS
All legal opinion/matters in connection with the preferred shares that are subject of this Offer shall be passed
upon by Angara Concepcion Regala & Cruz Law Offices (“ACCRALAW”) and CPGI’s legal division for the
Company and CLC. ACCRALAW has no direct or indirect interest in the Company and CLC. ACCRALAW
may, from time to time, be engaged by the Company to advise in its transactions and perform legal services
on the same basis that they provide such services to their other clients.
The named independent legal counsels have not acted and will not act as promoter, underwriter, voting
trustee, officer, or employee of the Company.
INDEPENDENT AUDITORS
The financial statements of the Company as of December 31, 2014 were audited by SGV & Co., a member
firm of Ernst & Young Global Limited, independent auditors, in accordance with PSA, as stated in their report appearing herein.
SGV & Co. has acted as the Company’s external auditor since November 2014 and is the current audit partner. The Company has not had any material disagreements on accounting and financial disclosures with its
external auditor for the same periods or any subsequent interim period. SGV & Co. has neither shareholdings
in the Company nor any right, whether legally enforceable or not, to nominate persons or to subscribe for the
securities of the Company. SGV & Co. will not receive any direct or indirect interest in the Company or its
securities (including options, warrants or rights thereto) pursuant to or in connection with the Offer. The
foregoing is in accordance with the Code of Ethics for Professional Accountants in the Philippines set by the
Board of Accountancy and approved by the Professional Regulation Commission.
In relation to the audit of the Company’s annual financial statements, the Company’s Corporate Governance
Manual, which was approved by the Board of Directors on November 17, 2014 , provides that the audit
committee shall, among other activities, (i) evaluate significant issues reported by the external auditors in
relation to the adequacy, efficiency and effectiveness of policies, controls, processes and activities of the
Company, (ii) ensure that other non-audit work provided by the external auditors are not in conflict with
their functions as external auditors, and (iii) ensure the compliance of the Company with acceptable auditing
and accounting standards and regulations.
The named independent auditor has not acted and will not act as promoter, underwriter, voting trustee,
officer, or employee of the Company.
The Company has not had any disagreements on accounting and financial disclosures, or auditing scope or
procedure, with its current external auditor for the same periods or any subsequent interim period.
AUDIT AND AUDIT-RELATED FEES
The aggregate fee billed for the current year is ₱50,000.00 for professional services rendered by SGV
& Co.
The Audit Committee recommends to the Board of Directors the discharge or nomination of the external
auditor to be proposed for approval at CPGI’s annual shareholders meeting, approves all audit engagement
fees and terms of the external auditor, and reviews its performance. It also reviews and discusses with
management and the external auditors the results of the audit, including any difficulties encountered. This
77
review includes any restrictions on the scope of the external auditor’s activities or on access to requested
information, and any significant disagreements with management. The Audit Committee also evaluates,
determines and pre-approves any non-audit service provided to the Company and its subsidiaries by the
external auditors and keep under review the non-audit fees paid to the external auditors both in relation to
their significance to the auditor and in relation to the total expenditure on consultancy.
No engagement for other services from SGV and Co. either for professional services, tax accounting
compliance, advise, planning and any other form of tax services nor any services rendered for products and
services other than the aforementioned audit services.
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PHILIPPINE TAXATION
The following is a discussion of the material Philippine tax consequences of the acquisition, ownership and
disposition of the Preferred Shares. This general description does not purport to be a comprehensive description of the Philippine tax aspects of the Preferred Shares and no information is provided regarding the
tax aspects of acquiring, owning, holding or disposing of the Preferred Shares under applicable tax laws of
other applicable jurisdictions and the specific Philippine tax consequence in light of particular situations of
acquiring, owning, holding and disposing of the Preferred Shares in such other jurisdictions. This discussion
is based upon laws, regulations, rulings, and income tax conventions or treaties in effect at the date of this
Prospectus. The tax treatment applicable to a holder of the Preferred Shares may vary depending upon such
holder’s particular situation, and certain holders may be subject to special rules not discussed below. This
summary does not purport to address all tax aspects that may be important to a holder of the Preferred
Shares. Prospective investors of the Preferred Shares are urged to consult their own tax advisors as to the
particular tax consequences of the ownership and disposition of the Preferred Shares, including the applicability and effect of any local or foreign tax laws.
As used in this section, the term “resident alien” refers to an individual whose residence is within the Philippines and who is not a citizen of the Philippines, a “non-resident alien” is an individual whose residence is
not within the Philippines and who is not a citizen of the Philippines. A non-resident alien who is actually
within the Philippines for an aggregate period of more than 180 days during any calendar year is considered
a “non-resident alien doing business in the Philippines”. A non-resident alien who is actually within the Philippines for an aggregate period of 180 days or less during any calendar year is considered a “non-resident
alien not doing business in the Philippines”. A “resident foreign corporation” is a non-Philippine corporation
engaged in trade or business within the Philippines, and a “non-resident foreign corporation” is a nonPhilippine corporation not engaged in trade or business within the Philippines. The term “dividends” under
this section refers to cash or property dividends. “Tax Code” means the Philippine National Internal Revenue
of 1997, as amended.
Documentary Stamp Taxes on Shares
The original issue of shares is subject to documentary stamp tax of ₱1.00 on each ₱200.00 par value, or
fraction thereof, of the shares issued. On the other hand, the transfer of shares is subject to a documentary
stamp tax at a rate of ₱0.75 on each ₱200.00, or fractional part thereof, of the par value of the Common
Shares. The documentary stamp tax is imposed on the person making, signing, issuing, accepting or
transferring the document and is thus payable either by the vendor or the purchaser of the Common Shares.
Distribution of Net Room Rental Revenue
The revenue share of the shareholders from rental income will generally form part of their taxable income
subject to Philippine Income Tax. The income tax implications would vary depending on the taxpayer
classification of the shareholder.
Where the shareholder is a Philippine domestic corporation1 or a resident foreign corporation2, the income
tax rate will generally be 30% of the taxable income or will be 2% of the gross income should the minimum
corporate income tax apply. By way of advance collection of the income tax, 5% of the revenue share
distribution will be subjected to creditable withholding tax by the Company.
1
2
A corporation created or organized under the Philippine Laws.
Applies to a corporation engaged in trade or business within the Philippines.
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Revenue share paid to nonresident foreign corporation3 will generally be subject to 30% final withholding
tax based on the gross payment. This is subject to the application of preferential tax treatment as may be
granted by Tax Treaties entered into by the Philippines and the country where the shareholder is a tax
resident. For purposes of availing any tax treaty relief, the Philippine tax office (Bureau of Internal
Revenue) mandates the filing of an application for tax treaty relief prior to the transaction.
If the shareholder receiving the revenue share is a Philippine Citizen, an individual resident alien4, or an
individual nonresident alien engaged in trade or business in the Philippines 5 , the revenue share will be
subject to the graduated rates of income tax ranging from 5% to 32%, depending on the taxable income of
the shareholder. 5% of the revenue share will be subjected by the Company to creditable withholding tax as
advance payments of the income tax.
The revenue share paid to nonresident aliens not engaged in trade or business in the Philippines will be
subject to 25% final withholding tax, which shall be withheld by the Company on the gross amount of the
revenue share. The shareholders may avail of preferential tax treatment as may be provided under applicable
Tax Treaties. This is subject, however, to the filing of an application for tax treaty relief as being required
by the Philippine tax office.
The revenue share of the shareholders from rental income will generally be subject to 12% Value-Added Tax
based on the gross amount received by the shareholders. Where the shareholder is a not a Philippine
resident, the 12% VAT shall be withheld by the Company.
Distribution of Revenue share6
Revenue share received by domestic corporations or resident foreign corporations are exempt from income
tax and withholding tax.
Revenue share payments to nonresident foreign corporation shareholders will generally be subject to 30%
final withholding tax on the amount of the revenue share. This may be reduced to 15% final withholding tax
if the country where the shareholder is a resident of allows a credit against the tax from the shareholder taxes
deemed to have been paid in the Philippines equivalent to 15%. Any applicable preferential Tax Treaty rates
may be availed of upon filing of an application for tax treaty relief with the Philippine tax office.
If the shareholders are Philippine Citizens, resident aliens, or nonresident aliens engaged in trade or business
in the Philippines, the revenue share will be subject to 10% final withholding tax. The tax will be withheld
and will be remitted by the Company to the Philippine tax office.
Revenue share paid to nonresident aliens not engaged in trade or business in the Philippines will be subjected
by the Company to final withholding tax of 25%. Preferential Tax Treaty rates, where applicable, may be
availed of by filing an application for tax treaty relief with the tax office.
Disposition of shares
Gains from the disposition of the shares by the shareholders will be subject to 5%/ 10% Capital Gains Tax if
the shares are held by the shareholders as capital assets7. If the shares are held as ordinary assets the ordinary
income tax applicable to corporations or individuals will apply.
3
4
Refers to foreign corporation not engaged in trade or business within the Philippines.
Refers to an individual whose residence is within the Philippines and who is not a Philippine Citizen.
5
A nonresident alien individual who shall come and stay in the Philippines for an aggregate period of more than 180 days during any calendar year
shall be deemed a nonresident alien doing business in the Philippines.
6
Refers to cash or property revenue share taken out of the unrestricted retained earnings of the Company.
7
Held by taxpayers other than dealers in securities.
80
The disposition of the shares may likewise be subject to 12% VAT if the shares are held by the shareholders
as inventory or shares available for sale.
A documentary stamp tax of Php.75 on each Php200.00, or fractional part, of the par value of the shares will
be imposed. Where the shares are without par value, the tax will be equivalent to 25% of the documentary
stamp tax due on the original issuance of such shares.
Tax Treaties
The following table lists some of the countries with which the Philippines has tax treaties and the tax rates
currently applicable to non-resident holders who are residents of those countries:
Country
Canada ...........................................................................................
France ............................................................................................
Germany ........................................................................................
Japan ..............................................................................................
Singapore.......................................................................................
United Kingdom ............................................................................
United States..................................................................................
Dividends
Capital Gains Tax Due
on Disposition of
Common Shares Outside the PSE
(%)
(%)
25(1)
Exempt(8)
15(2)
Exempt(8)
15(3)
5/10(9)
15(4)
Exempt(8)
25(5)
Exempt(8)
25(6)
Exempt(10)
25(7)
Exempt(8)
____________
Notes:
(1)
15% if the recipient company controls at least 10% of the voting power of the company paying the
dividends.
(2)
10% if the recipient company (excluding a partnership) holds directly at least 10% of the voting
shares of the company paying the dividends.
(3)
10% if the recipient company (excluding a partnership) owns directly at least 25% of the capital of
the company paying the dividends.
(4)
10% if the recipient company holds directly at least 10% of either the voting shares of the company
paying the dividends or of the total shares issued by that company during the period of six months
immediately preceding the date of payment of the dividends.
81
(5)
15% if during the part of the paying company’s taxable year which precedes the date of payment of
dividends and during the whole of its prior taxable year at least 15% of the outstanding shares of the
voting shares of the paying company were owned by the recipient company.
(6)
15% if the recipient company is a company which controls directly or indirectly at least 10% of the
voting power of the company paying the dividends.
(7)
20% if during the part of the paying corporation’s taxable year which precedes the date of payment
of dividends and during the whole of its prior taxable year, at least 10% of the outstanding shares of
the voting shares of the paying corporation were owned by the recipient corporation. Notwithstanding the rates provided under the Republic of the Philippines-United States Treaty, residents of the
United States may avail of the 15% withholding tax rate under the tax-sparing clause of the Tax
Code provided certain conditions are met.
(8
Capital gains are taxable only in the country where the seller is a resident, provided the shares are
not those of a corporation, the assets of which consist principally of real property situated in the
Philippines, in which case the sale is subject to Philippine taxes.
(9)
Under the tax treaty between the Philippines and Germany, capital gains from the alienation of
shares of a Philippine corporation may be taxed in the Philippines irrespective of the nature of the
assets of the Philippine corporation. Tax rates are 5% on the net capital gains realized during the
taxable year not in excess of ₱100,000 and 10% on the net capital gains realized during the taxable
year in excess of ₱100,000.
(10)
Under the tax treaty between the Philippines and the United Kingdom, capital gains on the sale of
the shares of Philippine corporations are subject to tax only in the country where the seller is a resident, irrespective of the nature of the assets of the Philippine corporation.
In order for an exemption under a tax treaty to be recognized, an application for tax treaty relief on capital
gains tax on the sale of shares must be filed by the income recipient before the deadline for the filing of the
documentary stamp tax return, which is the fifth day from the end of the month when the document transferring ownership was executed.
The requirements for a tax treaty relief application in respect of capital gains tax on the sale of shares are set
out in the applicable tax treaty and BIR Form No. 0901-C. These include proof of residence in the country
that is a party to the tax treaty. Proof of residence consists of a consularized certification from the tax authority of the country of residence of the seller of shares which provides that the seller is a resident of such country under the applicable tax treaty. If the seller is a juridical entity, authenticated certified true copies of its
articles of incorporation or association issued by the proper government authority should also be submitted
to the BIR in addition to the certification of its residence from the tax authority of its country of residence.
Estate and Gift Taxes
The transfer of the Preferred Shares upon the death of a registered holder to his heirs by way of succession,
whether such an individual was a citizen of the Philippines or an alien, regardless of residence, will be subject to Philippine estate tax at progressive rates ranging from 5% to 20% if the net estate is over
₱200,000.00.
The transfer of shares by gift or donation to a stranger (i.e. a person who is not a brother, sister, spouse, ancestor, lineal descendant or relative by consanguinity within the fourth degree of relationship) will be subject
to a donor’s tax at a flat rate of 30.0%. Gifts or donations to non-strangers, however, will be subject to progressive rates ranging from 2.0% to 15.0%, if the net gifts during the calendar year exceed ₱100,000.00, otherwise, such transfer will not be subject to donor’s tax. Corporate registered holders are also liable for Philippine donor’s tax on such transfers, but the rate of tax with respect to net gifts made by corporate registered
holders is always at a flat rate of 30.0%.
Estate and gift taxes will not be collected in respect of intangible personal property, such as shares, (1) if the
deceased at the time of death, or the donor at the time of donation, was a citizen and resident of a foreign
82
country which at the time of his death or donation did not impose a transfer tax of any character in respect of
intangible personal property of citizens of the Philippines not residing in that foreign country, or (2) if the
laws of the foreign country of which the deceased or the donor was a citizen and resident at the time of his
death or donation allow a similar exemption from transfer or death taxes of every character or description in
respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country.
83
PLAN OF DISTRIBUTION
The Offer Shares shall be distributed by the Company’s own marketing group, through its salesmen. The
marketing program involves the usual protocol followed by marketing outfits. Promotion shall make use of
advertising, mail drop. Billboards, sign boards, direct mailing to target market, print and media exposure,
and satellite offices in target locations shall also be utilized.
The marketing group is made up of permanent and contractual personnel employed by the Company on a
salary/commission basis. The estimated total compensation/commission to be paid by the Company to its
selling agents is in the amount of Php 96,720,000.
The Company has not engaged any external Brokers/Dealers to market or sell the Offer Shares. Neither will
the Offer Shares be underwritten. The Company has not engaged any finders, promoters or underwriters for
the Offer.
The Offer Shares shall be offered to the public in general and the Company has not designed any of the Offer
Shares to be sold to any specified person. The Offer Shares will not be listed in a stock exchange and none
of the Offer Shares will be sold or traded through a stock exchange.
Pre-qualification
The Company will pre-screen the prospective investor. The pre-qualification process shall be done by
matching an investor’s personal circumstances vis-a-vis the Company criteria, which is initially done prior to
invitation to attend the presentation.
Qualifications shall include:
•
•
•
Applicants should be at least 18 years old and above
If married, the combined monthly income should be at least 165,000
If single, separated, widowed, the prospect should have a monthly income of ₱135,000
In addition to the form where the prospects are asked to fill in their personal circumstances, personal
interviews will also be conducted to confirm eligibility of prospective applicant.
Resale of Preferred Shares
Resale of Preferred Shares in the secondary market shall be effected only upon pre-qualification of
prospective buyers based on the standards set by the Company, and subject to the lock-up period as stated
herein.
Amortization of Preferred Shares
The Company has an interest-free installment plan for Preferred Share purchasers. Investors may make a
down payment equivalent to 2 months’ amortization. The amortization term will be based on an estimated
“Turnover Date” of September of 2019, less the date of issuance of reservation fee. All amortization
payments are to be fully paid by “Turnover Date”. Amortization term will assume a declining balance
mechanism therefore, payment schedule will be adjusted based upon the month of subscription. For purpose
of illustration, below is the amortization schedule table:
84
Unit Type
Studio
Deluxe 1-Bedroom
Superior 1-Bedroom
Premier 1-Bedroom
Share Category
Pref Share A
Pref Share B
Pref Share C
Pref Share D
Selling Price
Per Fractions
Admin &
Processing Fee
2,166,671
3,105,557
4,983,329
5,777,772
25,000
25,000
25,000
25,000
Deposit
Balance
44,333.48
74,377.84
134,466.54
159,888.72
Monthly
Amortizations at
51* Months (80%
Equity)
34,667
49,689
79,733
92,444
20% Balance
433,334
621,111
996,666
1,155,554
*51 Months assumes June as the month of subscription
If a purchase is made on installment basis, the following rules shall apply in the event of delay and/or default
in installment payment(s).
•
If a purchaser fails to pay his regular installment after thirty (30) days of having received a written
notice, the Company shall send further notification to the purchaser advising that failure to discharge
in full the arrears (including any arrears that have risen since the date of the first notice) within thirty
(30) days from receipt of notice, will result in the termination of the Purchase Agreement without the
benefit of refund to the purchaser or any and all prior installment payments made before the default.
•
Late payments shall be subject to interest to be determined by the Company from time to time in accordance with market rate.
•
Upon default, the Company shall have the exclusive right and option to demand all outstanding
amounts to be immediately due and demandable, and require payment of the same.
Selling Restrictions
No securities, except of a class exempt under Section 9 of the SRC or unless sold in any transaction exempt
under Section 10 thereof, shall be sold or distributed by any person within the Philippines, unless such securities shall have been registered with the SEC on Form 12-1 and the registration statement has been declared
effective by the SEC.
85
LEGAL MATTERS
All legal opinion/matters in connection with the Preferred Shares that are subject of this Offer shall be
passed upon by Angara Concepcion Regala & Cruz Law Offices (“ACCRALAW”) and CPGI’s legal division for the Company and CLC. ACCRALAW has no direct or indirect interest in the Company and CLC.
ACCRALAW may, from time to time, be engaged by the Company to advise in its transactions and perform
legal services on the same basis that they provide such services to their other clients.
The named independent legal counsels have not acted and will not act as promoter, underwriter, voting trustee, officer, or employee of the Company. The legal counsel has neither shareholdings in the Company nor
any right, whether legally enforceable or not, to nominate persons or to subscribe for securities in the Company. None of the legal counsel will receive any direct or indirect interest in the Company or in any securities thereof (including options, warrants or rights thereto) pursuant to or in connection with the Offer.
86
INDEPENDENT AUDITORS
The financial statements of the Company as of December 31, 2014 were audited by SGV & Co., a member
firm of Ernst & Young Global Limited, independent auditors, in accordance with PSA, as stated in their report appearing herein.
SGV & Co. has acted as the Company’s external auditor since November 2014 and is the current audit partner. The Company has not had any material disagreements on accounting and financial disclosures with its
external auditor for the same periods or any subsequent interim period. SGV & Co. has neither shareholdings
in the Company nor any right, whether legally enforceable or not, to nominate persons or to subscribe for the
securities of the Company. SGV & Co. will not receive any direct or indirect interest in the Company or its
securities (including options, warrants or rights thereto) pursuant to or in connection with the Offer. The
foregoing is in accordance with the Code of Ethics for Professional Accountants in the Philippines set by the
Board of Accountancy and approved by the Professional Regulation Commission.
The aggregate fee billed for the current year is P50,000.00 for professional services rendered by SGV & Co.
In relation to the audit of the Company’s annual financial statements, the Company’s Corporate Governance
Manual, which was approved by the Board of Directors on November 17, 2014 , provides that the audit
committee shall, among other activities, (i) evaluate significant issues reported by the external auditors in
relation to the adequacy, efficiency and effectiveness of policies, controls, processes and activities of the
Company, (ii) ensure that other non-audit work provided by the external auditors are not in conflict with
their functions as external auditors, and (iii) ensure the compliance of the Company with acceptable auditing
and accounting standards and regulations.
87
INDEX TO AUDITED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AS OF MARCH 31, 2015:
Independent Auditors’ Report ..................................................................................................................
Interim Statements of Financial Position..................................................................................................
Interim Statements of Comprehensive Income.........................................................................................
Interim Statements of Changes in Equity .................................................................................................
Interim Statements of Cash Flows............................................................................................................
Notes to Interim Financial Statements......................................................................................................
F-1
Century Acqua Lifestyle Corporation
21/F Pacific Star Building
Makati Avenue, Makati City
Philippines
LEGAL COUNSEL TO CENTURY ACQUA LIFESTYLE CORPORATION
Angara Abello Concepcion Regala& Cruz
22/F ACCRA Law Tower,
2nd Ave. cor. 30th Str., Crescent Park West,
Bonifacio Global City, Taguig, 0399
Metro Manila
Philippines
INDEPENDENT AUDITOR
SyCipGorresVelayo& Company
(a member firm of Ernst & Young Global Limited)
6760 Ayala Avenue
Makati City 1226
Philippines

CENTURY ACQUA LIFESTYLE CORPORATION

Transcription

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