MWIDE sends 5.2B cash to stockholder Citicore for a property developer

Megawide Construction Corporation (MWIDE) reported as cash balance of 12.5 Billion as of the end of the first quarter of 2023. MWIDE’s cash ballooned as a result of its divestment of Mactan-Cebu International Airport operator to the Aboitiz Group.

In 2022, MWIDE received from Aboitiz InfraCapital 15 Billion from the sale of its Mactan-Cebu International Airport operator subsidiary to the Aboitiz Group.

Minority stockholders and the market is expecting that the windfall from the divestment of the airport operator would be fairly shared to all.

MWIDE counts Citicore Holdings Investments as its controlling shareholder. MWIDE is now sending 5.2 Billion of that windfall to Citicore in exchange for a property developer (PH1 World Developers) that Citicore also owns.

A closer look at the Fairness Opinion used to justify the transaction valuation, will show that the property developer has a just a cash balance of 50 Million.

Whether the price tag of 5.2 billion is worth it, is yet to be determined. The management of MWIDE has to better show in its future operating results that the price tag of the property developer is worth it. The bar is really high especially that the transaction involves related parties.

If management will fail to demonstrate that the transaction is worth it, the market will probably punish MWIDE’s stock price.

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