LBC Development Corp. is buying unissued shares of Federal Resources Investment Group Inc., which would result in majority ownership of the listed shell company.
In its disclosure to the Philippine Stock Exchange, Federal Resources said its board of directors approved the issuance of some 59.1 million common shares at P1 apiece to LBC, a company known for its courier services and remittance business.
The said shares will come from Federal Resources’s unissued portion of its authorized capital stock.
The company has an authorized capital stock of 100 million at P1 par value, with 40.9 million shares issued and outstanding shares.
At that rate, LBC will take in some 59 percent of the company if the deal pushes through.
“The company needed to raise additional capital through the issuance of new shares out of the unissued portion of the company’s authorized capital stock for general corporate purposes. Further, such infusion is preparatory to a potential additional investment of LBC Development Corp./LBC Express Inc. into the company as a result of the ongoing due diligence on the company,” Federal Resources said.
The issuance will be “subject to acceptable documentation being arrived at, as well as the fulfillment of such conditions agreed upon by the parties, including a mandatory tender offer, were required under relevant laws and regulations.”
The move follows an earlier announcement of a due diligence being undertaken by the LBC Group for a possible “acquisition, buy-in or investment of an interest in” Federal Resources.
“The request was made by such substantial stockholder for himself and on behalf of other shareholders of Federal Resources who have expressed [or who may express] willingness to cede some or all of their interests in Federal Resources in favor of LBC,” the company earlier said.
LBC is a provider of courier and freight forwarding services. It is also a nonbank provider of domestic-remittance services and inbound international remittance services in the Philippines.
It is also one of the top 5 nonbank providers of domestic remittance services by remittance volume, as well as one of the top 5 nonbank providers of international inbound remittances in the Philippines by remittance volume in calendar year 2012.
LBC was looking last year to raise P6.98 billion from its initial public offering (IPO) of 330 million shares with an offer price of up to P21.16 per share.
The company said it would use proceeds of the IPO for strategic acquisition and organic expansion.
The IPO was later pulled out after the approval process at the Securities and Exchange Commission took a long time to complete, LBC said.
Formerly Federal Chemicals Inc., Federal Resources said it closed 2014 with a narrower loss at P15.39 million compared to the prior year’s P4.24 million.
Federal Resources was incorporated in1993 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.
VG Cabuag