Southeast Asia Cement Holdings Inc (Seacem) is launching a voluntary tender offer to buy back up to 93 percent of its shares in exchange for a mix of shares in its majority-owned subsidiary Lafarge Republic Inc. (LRI) and cash.
Based on its disclosure to the Philippine Stock Exchange (PSE) on Monday, the board of Seacem approved the buyback of a total of 989.34 million shares in exchange for Seacem’s shares in LRI at an exchange ratio of 3.73 Seacem shares for every one LRI common share. The shares can also be bought back for a cash amount of up to 2.8 centavos per share.
This exercise is seen allowing LRI to widen its public float as Seacem will trim its stake in the former by using LRI shares its currency to pay for Seacem shares that the company will buy back. On the other hand, the buyback will reduce Seacem’s public float.
A stock dealer said this transaction seemed to be designed to allow LRI to meet the 10 percent minimum public float required by the Philippine Stock Exchange for continuing listing. If all targeted shareholders would accept the tender, this would reduce Seacem’s public float, which suggested that it might go for voluntary delisting, the dealer said.
The tender offer will start on October 12 and end on Nov. 14, 2012, subject to Seacem’s right to extend the tender offer with the approval of the Securities and Exchange Commission.
Earlier, Seacem sold a 2.3 per cent interest in LRI to local institutional investors for PHP1.14bn. The transaction beefed up Lafarge’s public ownership to six per cent from 3.7 per cent, which still falls short of the PSE requirement.
LRI is one of the 27 publicly listed companies facing trading suspension by the first trading day of 2013 if unable to meet the minimum public float requirement. But the company has said it is confident of meeting the 10 percent public float requirement before the year’s end.
LRI earlier announced plans to increase its production capacity by the first quarter of 2013, supplying an additional 1Mta of cement throughout the Philippines after a set of investment projects is completed. LRI is investing to revamp its Danao, Cebu, grinding plant and to ease bottlenecks in its Norzagaray, Bulacan, mill.
LRI said it experienced strong demand for its products and services from both public and private construction investments in the first half of 2012 and has been expecting another year of sales and earnings growth in 2013.
