Lucio Tan offers to buy out PAL minority shareholders
The group of businessman Lucio Tan is offering to buy out minority shareholders of flag carrier Philippine Airlines (PAL) and its listed holding firm, PAL Holdings Inc., in a voluntary tender offer transaction, a company official said on Friday.
The deal was meant to give minority stockholders the “same opportunity” to exit the airline controlled by Tan after the buyout of conglomerate San Miguel Corp.’s (SMC) 49 percent stake last month, Philippine Airlines general manager Jaime Bautista said in an interview Friday.
Tan bought back SMC’s minority interest in Philippine Airlines for over $1 billion, giving the taipan control of almost 100 percent of Trustmark Holdings Corp., an entity which owns 89.78 percent of PAL Holdings, ending SMC’s two-year stint as a stockholder and airline manager.
That means the tender offer would cover stockholders of PAL Holdings owning 10.22 percent, which is just above the minimum 10 percent public float requirement of the Philippine Stock Exchange.
PAL Holdings, meanwhile, owns 98.27 percent of Philippine Airlines Inc.
The tender offer will be conducted through Tan-controlled entities Buona Sorte Holdings Inc. and Horizon Global Investments Ltd., a disclosure to the Philippine Stock Exchange showed on Friday. The offer price would be pegged at the “same economic terms” used to acquire SMC’s 49 percent stake.
The deal was prompted by a Securities and Exchange Commission tender offer requirement, given that Tan’s group had effectively breached the 35 percent threshold that would trigger the buyout offer in PAL Holdings.
However, Bautista said the spirit of that tender offer was to protect minority stockholders in case of a change of control—which did not apply in this case because Tan never gave up equity control of PAL Holdings even with SMC’s entry.
Nevertheless, Bautista said they would hold a voluntary tender offer, which likely had less requirements than the one mandated by the government.
“Just the same, we would like to give minority shareholders the same chance,” Bautista said in an interview. “If they are not comfortable holding PAL, we can buy their shares.”
Bautista noted that they plan to launch the tender offer within the next few weeks after details are finalized over the next few days.
Philippine National Bank’s Trust Banking Group is PAL Holdings’ tender offer agent while PNB Securities is Philippine Airlines’ tender offer agent, a published notice showed.
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