Tanduay Holdings plans P1.8-B secondary offer

MANILA, Philippines - Hard liquor maker Tanduay Holdings Inc. is planning to raise around P1.8 billion through a secondary offering of shares in December.

Tanduay chief finance officer Nestor C. Mendones said the equity offering is aimed at complying with the minimum 10 percent public float rule required by the Philippine Stock Exchange.     

After the offer, Tanduay will increase its public float to 10.7 percent from the current 2.9 percent.

Mendones said the board approved a capital raising exercise via a two-tranche placing and subscription transaction involving the sale by majority shareholder Tangent Holdings Inc. of 398.14 million shares to the public at a still undetermined price.

 The board likewise accepted the offer of Tangent to subscribe to the same number of new common shares from Tanduay’s unissued capital stock at the adjusted offer price, subject to the approval of stockholders.

The company has tapped PNB Capital & Investment Corp. as financial advisor and issue manager.

Proceeds from the equity offering will be used to fund the company’s expansion of capacity, increase in operational efficiency and rationalization of operations.

Tanduay is beefing up the capacity of its nine-hectare distilling plant in Batangas to 150,000 liters from the current 100,000 liters per day. It is also repairing its plant in Cabuyao, Laguna which was gutted by fire in October 2008.   The facility used to produce 30,000 cases per day.

Tanduay, which controls over 95 percent of the local rum market in Visayas and Mindanao, plans to double its market share in Luzon to 12 percent over the next three years. It aims to achieve this through the launch of more product offerings.

Tanduay grew its net income by 60 percent in the nine months ending September this year to P855 million,already exceeding its full year profit of P645 million in 2010.

Given its strong performance, Tanduay is on track to meet its income target of P1 billion for this year. Revenues are forecast to rise 20 percent to P14 billion as sales volume increase 15 percent to 20.39 million cases.

Among its traditional best sellers include Tanduay Five Years, Tanduay ESQ, Rhum G5, Gin Kapitan, Cossack Blue and the newly-launched Boracay Rum.