LBC to issue $50-M convertible notes to CP Briks
LBC EXPRESS Holdings, Inc. (LBC) will be issuing $50 million in secured convertible notes to finance its expansion, it said on Wednesday.
In a disclosure to the stock exchange, the Araneta- led firm said it has secured board approval to issue the convertible instruments due on 2024 to CP Briks Pte. Ltd. The shares will be issued out of an increase in authorized capital stock in LBC.
The listed firm’s board of directors also approved the creation of a pledge over all of LBC’s shares in its unit, LBC Express, Inc. for the transaction.
All acts of the board are pending shareholder approval.
Under the deal, LBC’s parent, LBC Development Corp. will first extend 51% of its outstanding capital stock in the company through a third party pledge to complete the transaction. LBC has entered into an omnibus agreement for the transaction.
Earlier this month, the Philippine Stock Exchange rejected the company’s application for a P1.2- billion follow- on offering due to pending cases filed by the Philippine Depository Insurance Corp. against its owners for the supposed unsound management of the now defunct- LBC Development Bank, Inc.
LBC had planned to offer 69.10 million common shares in the follow- on offering, comprising 10 million unissued common shares and 59.10 million secondary shares owned by LBC Development. The public offering was priced at P12 each for a total of P829 million. LBC was to use the net proceeds of the offer amounting to P779.6 million for strategic acquisition, organic expansion, and general corporate purposes.
“Convertible instruments are convertible to common shares or preferred shares of the company. As of now there is no other way to expand for LBC since they were not allowed to conduct a followon offering,” Diversified Securities, Inc. equity analyst Aniceto K. Pangan said in a phone interview.
Asked for an outlook on LBC, Mr. Pangan said the rejection of its follow-on offering only means that it would not be able to expand as aggressively as it could.
“It’s a logistics company, and logistics companies are very profitable nowadays... It’s very attractive, and with a growing economy they need that for their growth,” Mr. Pangan said, noting other businessmen such as Henry Sy, Sr. and the Ayalas who have already forayed into the logistics business.
In the first three months of 2017, LBC reported a 10.35% year-on-year growth to P227.93 million on the back of the expansion of its air freight and courier services.
Shares in LBC were down by two centavos or 0.12% to close at P16.38 each on Wednesday.