Metro Pacific subjects Axelum acquisition to profitability targets
Metro Pacific Investments Corporation (MPIC), through wholly-owned subsidiary Metro Pacific Agro Ventures Inc. (MPAV), has amended its agreement to acquire a strategic stake in coconut products producer Axelum Resources Corp. by subjecting the acquisition to profitability targets.
While Axelum disclosed to the Philippine Stock Exchange (PSE) that it has sealed the ₱5.32 billion deal for MPAV to acquire a 34.76 percent stake in Axelum, the basis for payment has been amended to be on installments and subject to “achievement of certain EBITDA milestones.”
In its disclosure to The Stock Exchange of Hong Kong, MPIC’S parent company First Pacific Limited said that MPAV’S agreement to acquire 1.19 billion common shares and 200 million redeemable preferred shares of Axelum has been amended on Dec. 19, 2023.
“Whilst the total highest consideration for the Transactions payable by the Group will remain unchanged at approximately P5.32 billion or approximately ₱3.83 per share, the basis for payment of consideration under the SPA has been amended,” FPC said.
It added that the amendments call for the payment to be on installments “to the effect an initial payment of ₱3.37 billion would be payable on or around December 22, 2023, with additional payments payable upon achievement of certain EBITDA milestones up to the original purchase price under the original SPA (share purchase agreement).”
“The amendments in relation to the payment by installments under the SPA were agreed following arms’ length negotiations of the parties. For the avoidance of doubt, an amount of ₱0.5 billion will be payable for the redeemable preferred shares also on or around December 22, 2023, which is not subject to the EBITDA milestones referred to above,” FPC said.
The firm said the parties also agreed
to an extension of the settlement date of the SPA and the subscription agreement to January 15, 2024.
MPIC Chief Finance, Risk and Sustainability Officer Chaye A. Cabal-revilla said last November that they had to “dig deeper” into the assumptions or forecasts of Axelum for 2023 and 2024 “because the expected outcome in terms of performance in our earlier due diligence has not happened... because they have not met their targets and they are going to re-forecast their numbers."
She said Axelum has been having difficulty in recovering from the weak sales in the US which is the major export market for its coconut products.
MPIC Chairman, President, and CEO Manuel V. Pangilinan and Axelum Resources Corp. Chairman and CEO Romeo I. Chan during the signing ceremony held last February 6.