H20 spins off water business
PHILIPPINE H2O Ventures Corp. (H2O) is spinning off its water assets as it prepares for a takeover by Davao-based businessman Dennis A. Uy’s property company.
In a disclosure to the stock exchange on Thursday, H2O said its board of directors approved the sale of its water business to sister firm Tabuk Water Corp. ( Tabuk) for P442 million. Both parties have also signed a share purchase agreement for the transaction.
H2O’s water business is solely under Calapan Waterworks Corp. (CWWC), where it holds a total of 137.05 million common shares, or 99.75% of the issued and outstanding shares.
CWWC owns and operates the local waterworks system of Calapan City, Oriental Mindoro. The company serves 22 urban barangays and 13 adjoining rural barangays, connecting a total of 13,384 households as of 2016.
The spin-off of the water business is in line Memorandum of Agreement between H2O’s parent, Jolliville Holdings Corp. (JOH) and other related parties and Mr. Uy’s Udenna Development Corp. (UDEVCO) last December 2017. Here, JOH agreed to sell all its shareholdings, or 62.006%, in H2O to UDEVCO.
At least two-thirds of the shareholders of H2O would have to approve the transaction before it can be completed, as well as the confirmation by UDEVCO and JOH.
UDEVCO will also be launching a mandatory tender offer for the H2O shares, as per the Securities Regulation Code.
Shares in H2O jumped 13.03% or 77 centavos to P6.68 apiece at the stock market’s close on Thursday, while parent JOH enjoyed a 7.54% increase or 37 centavos to P5.28 each. The two firms were among the top gainers for the day, defying the Philippine Stock Exchange index’s 1.14% drop to 8,515.57 as rising bond yields continued to put a pressure on global markets.
Mr. Uy’s property arm had earlier expressed interest taking its business public, saying it is considering an initial public offering or backdoor listing.
UDEVCO currently operates Lapu- Lapu Land Corp., a Cebu-based firm undertaking the development of a $341-million Lapu-Lapu Leisure Mactan project. Spanning 12.5 hectares, the project will house a casino, retail complex, and hotels. The company looks to start the casino’s operations as early as 2019, ahead of the development’s target completion in 2022.
Mr. Uy has been steadily expanding his business since the start of President Rodrigo R. Duterte’s administration. His logistics arm, Chelsea Logistics Holdings Corp., has been snapping up logistics firms to grow its reach after conducting a P5.84-billion IPO last June 2017.