By James A. Loyola
BDO Unibank, Inc. (BDO) has entered into an agreement to sell a controlling stake in its publicly-listed subsidiary, BDO Leasing and Finance (BDOLF), to a third party as part of the bank’s restructuring of its leasing business.
In a statement, the bank said the restructuring of its leasing business is being undertaken to optimize the financial needs of clients in light of new accounting regulations covering lease transactions.
IFRS 16, which took effect in January 2019, requires leases to be recognized on-balance sheet, similar to a loan facility. This makes lease transactions a less attractive option to corporate borrowers compared to the past.
Under the restructuring process, BDO has incorporated a new, privately-held finance company, BDO Finance Corporation (BDO Finance), to provide customers continuing access to lease products and services.
Additionally, BDO Finance will assume current lease transactions booked in BDOLF to provide continuity to existing clients.
Meanwhile, clients who now find regular bank loans more attractive vis-à-vis leases can access BDO’s wide range of products and services.
“We wish to reassure BDOLF clients that their financing requirements will continue to be serviced, and there will be no effective change in their existing lease arrangements that will be assumed by BDO Finance,” said BDOLF President Roberto E. Lapid.
BDOLF will be re-named and its Articles of Incorporation and By-laws will be amended to reflect the new business direction.
As required by regulation, a tender offer will likewise be undertaken by the buyer to provide minority shareholders an opportunity to sell their BDOLF shares. The timetable and details of the tender offer will be announced by the buyer in due course.
The sale transaction is subject to closing conditions, including approval by regulatory authorities.