By VG Cabuag
THE board of Premiere Horizon Alliance Corp. on Wednesday said it has approved the company’s issuance of up to P600 million exchangeable notes that will be done through private placement, as it prepares for a stock-rights offer during the remaining months of the year.
The company said in its disclosure to the Philippine Stock Exchange that it will issue a main tranche of P350 million, proceeds of which will be used to fund its expansion plans.
There will also be an optional tranche of P250 million, which will be used “to accelerate certain strategic developments in the existing businesses, as well as possible new acquisitions that are currently being evaluated.”
The notes will have a term of three years with a fixed interest of 8 percent per year, payable quarterly and are exchangeable into outstanding listed and tradeable common shares of the company at P1 per share.
“Another feature of the note allows the noteholder to participate in a planned stock-rights offer even while the loan is outstanding,” the company said in its disclosure.
The noteholder will also have the right to purchase listed shares equivalent to his entitlement under the share rights offer (SRO) if he exchanged the loan for shares.
“The noteholder may only exercise this option after the noteholder exchanges the notes. In the event that the noteholder exercises his right to purchase the rights shares, the noteholder shall acquire these shares at a price per share equivalent to the rights price, plus carrying cost of 4 percent per annum reckoned from the date of exercise of the SRO up to the acquisition date by the noteholder,” it added.
The stock-rights offer will be based on an entitlement ratio of one rights share for every 10 common share held and will be undertaken within the second half of 2015, the company said.
A nil-paid, detachable warrant shall also be issued to the noteholder for every 10 notional common shares, excluding the rights shares, regardless of whether the holder of the paper subscribes to the stock rights. The final terms and conditions of the planned SRO with attached nil-paid warrants shall be approved by the company’s board separately, it said.
The notes will form part of the P1.02 billion being raised by the company, P300 million of which came from the sale of its gaming assets, to finance the rollout of Concepts Unplugged Business Environment Solutions, the fleet expansion of Redstone Construction Development Corp., and fund the acquisition of Goshen Land Capital Inc.
“The projected income from these subsidiaries has now transformed [Premiere Horizon] into a company with recurring income taking advantage of the high growth in the countryside,” it said.
Last year Premiere Horizon announced its new direction of investing in countryside development after it sold its gaming business. This was immediately followed by the acquisition of CUBES. Operations of Redstone were also beefed up with a P366-million capital expenditure budget.
Earlier this month, Premiere Horizon also announced the acquisition of 55 percent of Goshen Land, a real-estate company based in Baguio City, for about P400 million.