SEC okays Baguio Gold capital hike

The Securities and Exchange Commission (SEC) has approved the increase in the capital stock of Baguio Gold Holdings Corp., a listed holding firm owned by taipan Lucio Tan, from only P400 million to P20 billion.

The capital hike is intended to cover the shares to be issued by Baguio Gold to TrustMark Holdings Inc. as part of a plan to acquire a majority stake in flag carrier Philippine Airlines (PAL), which is also owned by Tan.

The SEC also approved the change of Baguio Gold’s name to PAL Holdings Inc.

Under the proposed transaction, Baguio Gold will acquire six companies jointly holding 81.57 percent stake in its sister firm PAL for P136 million. The six companies are Pol Holdings Inc., Cube Factor Holdings Inc., Ascot Holdings Inc, Sierra Holdings and Equities Inc., Network Holdings & Equities Inc. and Maxell Holdings Corp.

Under the plan, five billion shares will be issued to TrustMark Holdings Inc., a holding company owned by Tan. These shares would give TrustMark 97.15 percent interest in Baguio Gold.

To support the capital increase, Baguio Gold would convert certain debt acquired in connection with the acquisition of indirect interests in PAL into equity.

Baguio Gold, formerly known as Baguio Gold Mining Co, was originally engaged in mineral exploration but shifted its main business to a holding firm in 1996.

It had been on the lookout for possible acquisitions since 1998 but has not made any major investments prior to the PAL deal.

PAL has reduced its debt to just about $1.1 billion since it went under receivership in 1999. It has been adding more flights and upgrading its fleet in view of the highly competitive business environment.

Tan bought into the airline in 1992. Eight years later, Tan acquired inactive mining firm Baguio Gold. This followed Tan’s acquisition of another listed company, Asian Pacific Equity Corp., which he renamed Tanduay Holdings.