Deal between MRC Allied, Lucio Tan Jr still on

MANILA, Philippines - The deal between MRC Allied Industries Inc. and a son of tycoon Lucio Tan which shall pave the way for the realignment of the listed holding firm’s business, is still on.

On the sidelines of the annual stockholders meeting of Tan-owned Eton Properties last week, Lucio “Bong” Tan Jr. said the deal is still a go and is just awaiting the approval of the Philippine Stock Exchange.  

The proposed deal involves a P3.5-billion asset infusion in the form of a coal or bunker-fired power plant from Tan, signalling the shift of MRC’s focus to power generation from real estate.

Upon completion of this transaction, Tan will become the controlling shareholder of MRC.

In March, MRC signed an agreement with Global Emerging Markets Investment Advisors Inc. and Global Emerging Markets Global Yield Fund Ltd. (GEM) to invest up to P1.38 billion in new equity in the listed firm over the next three years.

GEM is a $3.4-billion investment group having completed 285 transactions in 60 countries. The firm is an alternative investment group that manages a diverse set of investment vehicles across the world.

MRC had already obtained the Securities and Exchange Commission’s approval to undergo equity restructuring to reduce the deficit of the company as of Dec. 31, 2008 amounting to P966.93 million against the reduction surplus of P400 million.

The restructuring program calls for the decrease in the company’s capital stock from P500 million to P100 million and thereafter the increase in capitalization to P3 billion divided into 15 billion shares with the par value of P0.20 each.

The quasi-reorganization, debt-to-equity conversion and the increase in MRC’s authorized capital stock will give way to additional capital infusion by potential investors which will enable the company to reduce its deficit and meet the liquidity required to reinvigorate the company

With power generation expected to become its main business, MRC is open to acquiring more power facilities.

The power plant to be infused by Tan has a capacity of 200 megawatts and can generate sales of $40 million or P2 billion a year.

The Luzon-based plant, which is slated for commercial operations in the second half of the year, is seen to boost MRC’s financial standing this year. 

From a net loss of P143.62 million in 2008, the company has significantly trimmed losses to just P76.02 million. This was due to the settlement of loans and the reduction of employees in 2009.

While the property business would have to take a back seat, MRC is holding on to its 160-hectare industrial estate in Naga City, Cebu which is registered with the Philippine Economic Zone Authority (PEZA) as a special economic zone.

In the first quarter, MRC incurred a net loss of P11.49 million, higher than the P2.32 million reported in the same period a year earlier. This was largely due to the interest and penalties of P812,500 on bank loans, management and professional fees of P2.42 million.