THE board of Federal Resources Investment Group Inc. on Thursday said it has approved a resolution that will pave the way for the backdoor listing of the Araneta family’s LBC Express Inc. to the Philippine Stock Exchange (PSE).
Federal Resources said in its disclosure that its board has approved the acquisition of up to 1.04 billion issued and outstanding shares of LBC. It said that the book value of the said shares shall not be less than P1 billion.
The company will then be renamed as LBC Express, completing the Araneta firm’s backdoor entry.
A backdoor listing is deemed to occur when a listed company acquires or merges or combines with an unlisted company, or when a listed company is acquired by, merged or combined with an unlisted company, and which acquisition, merger, or combination results in a substantial change in the business, membership of the board of directors, or voting structure of the listed company.
Its trading symbol, on the other hand, will be changed to LBC from FED.
Federal also amended many portions of its bylaws, including its secondary purposes, changing its address to LBC Hangar in Pasay, increasing the number of board of directors from seven to nine and increasing its authorized capital stock from P100 million to P300 billion divided into 3 billion shares with a par value of P1 apiece.
The company’s stockholders will have to approve the said changes during its general membership meeting in September.
“The board of directors also approved the issuance of shares in one or more tranches, whether out of the increase in authorized capital stock or out of the unissued capital stock of the corporation following such increase in capital stock at a subscription price of P1 per share to LBC Development Corp.,” the company said.
The number of new shares will have to be sufficient to fund the acquisition by the corporation of the assets and other investments, subject to the approval by the Securities and Exchange Commission.
The new shares will be listed at the PSE.
LBC opted for a backdoor entry into Federal after it failed to receive regulatory approval for a planned initial public offering (IPO) last year.
It was earlier looking to raise P6.98 billion from its IPO, offering 330 million shares with an offer price of up to P21.16 per share. Proceeds of the IPO were earmarked for strategic acquisition and organic expansion.
Federal is one of most actively traded stock this year, gaining for a week and then dropping in the next. Its stock was suspended for trading starting on Thursday as a result of the said deal. It was last traded at P14.56, or up by 21 percent in the last month.
The company was formerly known as Federal Chemicals Inc. It incorporated in 1993 to engage in the manufacture of various adhesives and sealants, and other chemicals for hardware, construction, do-it-yourself and industrial applications. It listed with the PSE in December 2001.
In 2007 it received regulatory approval to change its purpose into that of a holding company.