GSIS sells Philex stake to First Pacific

MANILA, Philippines - Fresh from the sale of its stake in power utility giant Manila Electric Co. (Meralco), state pension fund Government Service Insurance System (GSIS) has divested its 5.9-percent stake in copper-gold producer Philex Mining Corp. to a unit of First Pacific Co. Ltd. for P6.02 billion.

In a disclosure to securities regulators, First Pacific said its affiliate Two Rivers Pacific Holdings Corp. completed on Jan. 28 the purchase of 286.78 million shares of Philex, representing approximately 5.9 percent of the total issued share capital of the country’s most profitable mining firm.

The shares were sold at P21 apiece (equivalent to approximately $0.46 or approximately HK$3.56), a premium of 52.7 percent to the closing price of P13.75 yesterday.

“The acquisition by Two Rivers of an additional approximately 5.9 percent interest in Philex further enhances the group’s objectives to expand and develop the group’s mining strategies in the Philippine. Philex is a company with a long history and which presently generates substantial profit from its existing mining interests,” First Pacific said.

The acquisition will bring Twin River’s total stake in Philex to 15.1 percent interest. Together with Twin River’s shareholdings, First Pacific now owns 46.6 percent of the country’s largest miner.

First Pacific said the group’s total investment cost in acquiring Philex shares, including Two Rivers’ stake, amount to around $571 million.

“As a result, the blended cost of acquisition will average to approximately P11.8 (equivalent to approximately $0.26) per share, or a discount of approximately 20 percent to the current share price of Philex,” First Pacific said.

First Pacific said the acquisition of additional shares of Philex is not subject to the mandatory tender offer requirement, nothing that the shares to be purchased comprise less than 35 percent of the outstanding shares of Philex and are being acquired after the lapse of the 12-month period from First Pacific’s initial purchase, through its wholly owned subsidiary, Asia Link B.V., on Nov. 28, 2008 of 20.06 percent of the common shares of the mining firm.

In December, First Pacific managing director and chief executive officer Manuel V. Pangilinan was elected as chairman of Philex following the purchase of additional shares from a group led by former Trade and Industry Minister Roberto Ongpin for P21 each share (roughly P9.49 billion).

Aside from First Pacific, state-run pension fund Social Security System owns 22 percent of Philex.

This recent purchase is in line with First Pacific’s bid to further beef up its investment portfolio in the Philippines through acquisitions.

About 80 percent of its assets are invested in the Philippines, which include a majority stake in infrastructure and services firm Metro Pacific Investments Corp., Philippine Long Distance Telephone Co. and Metro Pacific Tollways Corp.

First Pacific recently raised $282 million through a stock rights offering which the company intends to use to fund investments in Southeast Asia, particularly in the Philippine mining and infrastructure sectors.