AEV core subsidiaries to get chunk of ATS sales proceeds

CEBU, Philippines - The Aboitiz Equity Ventures (AEV) is poised to expand its three core subsidiaries—power, food and banking, after the company closes the buy-out deal of Aboitiz Transport System Corporation (ATS) to Negros Navigation Co. Inc. (Nenaco).

Although there is no exact details of the distribution of the US$105 million proceeds of the ATS sale, AEV chief financial officer (CFO) Stephen G. Paradies said all the three subsidiaries need more capital for expansion.

According to Paradies the thrift bank arm of AEV, the City Savings Bank (CSB) specifically needs more capital, as the bank is bullish of the country’s banking industry business.

Besides, he said after the company bought out some share of the AEV early this year, CSB is seen to require more capitalization.

On March this year, EAV board of directors approved the proposal to increase its ownership in City Savings Bank up to 100 percent by a direct ownership of 60 percent and indirectly by Pilmico—a 100 percent subsidiary of AEV, acquiring the remaining 40 percent.      

The combined purchase of AEV and Pilmico is valued approximately P1.36 billion. The planned acquisition is conditional upon AEV’s obtaining the necessary Monetary Board approval for the transaction.

“We are bullish on City Savings future and believe that the bank will be better positioned to optimize its potential under AEV’s wings and support,” said AEV president and chief executive officer (CEO) Erramon I. Aboitiz in an earlier interview.

Recently, Pilmico Foods Corporation increased the feed milling capacity of its plant in Iligan, but also announced that it is gearing for another round of expansion.

“Probably by 2012, we may be at almost 90 percent capacity,” said Pilmico CEO Sabin M. Aboitiz.

The Pilmico head said that the growth would come from improved feed sales and demand from the company’s own swine business.

On the other hand, Paradies emphasized that aside from banking and food, AEV is also putting its focus on investing on the acquisition of more power plants to strengthening its power business through Aboitiz Power (AP).

“We have a number of projects in the pipeline for our power business. This will also need more capitalization,” said Paradies.

On December 1 (2010), AEV announced the 100 percent sale of ATS to Nenaco and its partner China-ASEAN Marince B.V., a wholly-owned subsidiary of the China-ASEAN Investment Corporation Fund (CAF).

The agreement essentially values the equity of ATS at US$105 million, which is equivalent to approximately US$0.043 per share, is expected to close by January 2011.

Not included in the transaction are the joint venture companies of ATS with the Jebsen Group of Norway, which are engaged in ship management, manning and crew management, and bulk transport.

In the scheme of things, Paradies said the ATS’ revenue contribution to the conglomerate is “not significant”.

From January to September this year, ATS posted revenue loss of over P300 million, due because of the heavy dry-docking of vessels implemented in the first half of the year. (THE FREEMAN)