MRC Allied sees deal with Lucio Tan Jr to be finalized soon

MANILA, Philippines - MRC Allied Industries Inc., a publicly-listed firm owned by businessman Benjamin Bitanga, said yesterday it expects to finalize a deal with Lucio “Bong” Tan Jr. before the company’s its annual shareholders’ meeting scheduled this month.

In a disclosure to the Philippine Stock Exchange, MRC said its lawyers are drafting a memorandum of agreement with respect to the entry of the eldest son of tobacco, airlines and banking tycoon Lucio Tan into the listed company.

“We should be able to finalize the contract before our shareholders meeting intended on Jan. 22, 2010,” MRC said.

MRC said negotiations with the younger Tan are ongoing, which would allow Tan to obtain a backdoor stock market listing, a scheme used to evade the local bourse’s stringent listing requirements.

In a television interview, Bitanga said the deal, worth around P3 billion, will result in Tan becoming a majority shareholder of MRC with the infusion of power plants to be acquired by his group into the listed firm.

Bitanga said this is not the first time his group has entered into a joint venture with the Tan Group of Companies. “We have always been in talks with Bong and we have always been looking for opportunities and possible joint ventures,” he said.

He said the younger Tan has been in talks with several foreign entities to invest in various power plant projects. Tan is currently eyeing four power plants in Luzon, consisting of hydro, bunker and alternative energy sources.

“Tan has been very active in that industry and he felt that in order for him to attract the right investor, the projects would have to be part of the listed firm,” Bitanga said.

Bitanga, however, denied reports saying Tan already owns shares in MRC, causing the stock price to surge recently.

From only 36 centavos in end-December, MRC rose to as much as 79 centavos.

Last year, MRC approved to undertake a capital restructuring to reduce its deficit.

The program involves a decrease in the par value of MRC’s common shares from P1 to 20 centavos with the corresponding decrease in its authorized capital stock from P500 million divided into 500 million common shares with a par value of 20 centavos.

Following the decrease, MRC would raise its authorized capital stock to P9.5 billion or 47.5 billion shares at a par value of 20 centavos. This is to facilitate additional infusion by potential investors.

On Sept. 23, 2008, Pacific Asia Capital Corp. and MRC entered into a deed of assignment wherein PACC would assume the latter’s liabilities of P328.5 million from various creditors in exchange for 3.625 billion shares or 87.88 percent of MRC.

In the third quarter of 2009, MRC incurred a net loss of P4.33 million from a P34.85-million loss in the same period a year earlier.