DMCI Holdings Inc. has secured the approval of its shareholders for the P10 billion cash infusion of parent company Dacon Corporation to fund its share in the acquisition of an almost 90 percent stake in Cemex Holdings Philippines Corporation (CHP).
Approved during the special stockholders’ meeting is the subscription by Dacon of 10 million DMCI Class B preferred shares at P1,000 per share to be paid before DMCI has to pay Cemex Asian South East Corporation for its portion of the acquisition of CHP.
DMCI Chairman Isidro A. Consunji explained that, by issuing preferred shares to Dacon, it will not dilute the voting rights of the existing shareholders while improving the balance sheet of the company.
“The primary consideration for funding the acquisition is to optimize the financing costs and limit the impact on common shareholders dividends while providing mutual benefits for the investors and the company with fixed interest rates,” he said.
Consunji noted that the preferred shares’ dividend rate will be at 4 percent, while the management commits to a cash dividend of at least 25 percent of the previous year’s permanent income to common shares holders.
He also noted that the convertibility feature of the preferred shares “provides the flexibility in managing the capital structure and optimizes the cost of capital.”
Dacon has the option to convert its holdings to common shares at a price that carries a 30 percent premium over the volume weighted average price of the common shares over a 30-day trading period before the conversion date.
DMCI expects to complete the process of acquiring 89.86 percent of Cemex Holdings Philippines by end-November after recently securing the greenlight from the Philippine Competition Commission for the $305.6 million deal.
In an interview, DMCI Chief Finance Officer Herbert Consunji said DMCI has no intention of seeking the delisting of Cemex Philippines after the acquisition as he noted that “it is better to be listed” in cash they want to tap the equities market for fresh capital.
The Consunji family’s privately-held investment holding company Dacon Corporation is planning to kick off its P1.94 billion tender offer for the minority shares of Cemex Holdings Philippines Inc. (CHP) next month.
CHP said it has received a copy of the Mandatory Tender Offer Report of Dacon which intends to acquire up to 1.37 billion CHP shares representing approximately up to 10.14 percent of its issued and outstanding common shares at the estimated price of P1.42 per share.
The tender offer for CHP stock held by shareholders other than Cemex Asian South East Corporation will run from October 23, 2024 to November 21, 2024 but may be extended subject to the prior approval of the Securities and Exchange Commission.
CHP noted that the estimated tender offer price, which is based on the $305.6 million paid by the Consunji group for an 89.86 percent interest in the cement manufacturer, is lower than the P1.74 per share closing price last September 10.
If the public float of CHP falls below the 10 percent minimum public ownership requirements, Dacon will cause CHP’s newly-elected board of directors to approve a resolution authorizing the conduct of a public offering and the filing of an application for listing of the additional shares with the PSE.
The Consunji Group is considering the sale of a small stake in CHP if its public float falls below the minimum 10 percent after its tender offer.
Last April, CHP said its indirect parent company, Cemex Asia B.V. has signed a share purchase agreement with DMCI Holdings, Inc., Semirara Mining and Power Corporation, and Dacon Corporation.
This is for the sale of Cemex Asia’s 100 percent stake (42.14 million common shares) in Cemex Asian South East Corporation (CASEC) which owns approximately 89.86 percent of CHP.
DMCI said it is set to acquire a 56.75 percent stake in CASEC, comprising 23.92 million shares, Dacon will secure 32.12 percent or 13.54 million shares, while Semirara SMPC will purchase the remaining 11.13 percent or 4.69 million shares.