Tanduay to boost war chest with overseas share sale

MANILA, Philippines - Tanduay Holdings Inc., the holding firm of tycoon Lucio Tan, is shoring up its war chest with the planned issuance of as much as three billion shares overseas, which could fetch around P37.2 billion in proceeds based on the stock’s closing price yesterday.

In a disclosure to the Philippine Stock Exchange yesterday, Tanduay said its board of directors approved an equity placement abroad involving the shares held by its controlling shareholder, Tangent Holdings Corp., at a price to be determined at the end of the book-building exercise.

Tanduay closed at P12.40 yesterday, down 4.47 percent from P12.98 Wednesday. 

Sources said the planned equity placement is intended to beef up the group’s arsenal to prepare for the next wave of growth of its banking, tobacco, liquor, property and airline businesses.

Other sources said the shares may be sold at P15 to P20 each share depending on the valuation of the assets to be infused into the company. If sold within this price, the offering is expected to be the biggest share issuance ever by a local firm.

The share issuance is also intended to meet the 10 percent minimum public ownership requirement for continued listing on the exchange. Tanduay currently has a public float of 4.75 percent following the issuance of shares to Tangent.

Tanduay, which will be renamed LT Group Inc., will serve as the umbrella company for Tan’s various businesses which include Asia Brewery Inc., Fortune Tobacco Corp., Eton Properties Philippines Inc., Philippine Airlines, Air Philippines Corp., Philippine National Bank and Allied Banking Corp.

The company will acquire P200 billion or $5 billion worth of these assets before the end of September this year, a move that will effectively result in the diversification of its investment portfolio.

Sources said proceeds from the offering may be used to bankroll the expansion of its subsidiaries. 

Analysts said the consolidation will align all Tan assets under one roof, thereby allowing the group to leverage emerging opportunities in different sectors and provide better realization of value for investors.

The reorganization will likewise enable better utilization of resources and capital and create a stronger base for future growth.

The consolidation is also seen to unlock the value in operating assets and eliminate the need for multiple listing by group companies.