COURIER LBC Express Holdings Inc. is set to secure $50 million (P2.49 billion) in funding from Hong Kong-based CP Briks Pte. Ltd., proceeds of which will be used as its capital expenditures to bankroll its growth.
The company said in its disclosure to the Philippine Stock Exchange, it will issue a convertible instrument to CP Briks, which, in turn, will be convertible to shares in LBC when it becomes due.
“The proceeds of the convertible instrument will be used to fund the growth of the business of the company, including capital expenditures and working capital,” it said.
The shares will come from the unissued shares of LBC Express, a company controlled by the Araneta family.
It added the company will create a pledge over all of the company’s shares in LBC Express “in favor of CP Briks Pte. Ltd., to secure its obligations under the transaction, subject to the approval of the shareholders of the company in a meeting called for this purpose.”
Prior to the approval of its shareholders, LBC Express’s obligations will be secured by a third-party pledge to be extended by its parent firm LBC Development Corp., which holds over 51 percent of the outstanding capital stock of the company.
LBC said, after it secured its shareholders’ approval, it will then enter into an omnibus agreement with CP Briks.
In April the Securities and Exchange Commission (SEC) rejected LBC Express’s proposal to sell P1.2 billion worth of new shares to fund its expansion program.
The agency rejected its issuance after LBC failed to disclose a pending estafa case, and another case for conducting business in an unsafe and unsound manner against one of the controlling shareholders of the Araneta family, filed by the Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corp. “Based on records, the Aranetas are the control persons of LBC through LBC Development Corp., which is wholly owned by the Aranetas. The significance of the subject cases necessitates a full and fair disclosure, which LBC failed to do,” the SEC said.