Premiere Horizon selling up to P600M debt notes exchangeable to equity
HOLDING firm Premiere Horizon Alliance Corp. (PHA) plans to raise as much as P600 million from the sale of debt notes that can be swapped into company shares.
In a disclosure to the Philippine Stock Exchange on Wednesday, PHA said its board had approved the issuance via private placement of “exchangeable notes” with about P350 million as the main tranche and another P250 million as an optional tranche.
Proceeds are intended to be used to fund ongoing expansion plans, particularly to “accelerate certain strategic developments in the existing businesses as well as possible new acquisitions that are currently being evaluated,” the disclosure said.
It was recently reported that PHA is breaking into northern Luzon’s real estate market with a deal to acquire 55 percent of Goshen Land Capital Inc. (GLCI), a Baguio City-based property developer, for P440 million.
The notes offering planned by PHA will have a term of three years with a fixed interest of 8 percent per annum payable quarterly. They are exchangeable into listed common shares of PHA at a price of P1 per share.
Furthermore, the note allows the holder to participate in a planned stock rights offer even while the loan is outstanding. The noteholder will thus have the right to purchase listed PHA shares equivalent to his entitlement under the stock rights offering if he had exchanged the loan for shares. The noteholder may only exercise this option after exchanging the notes.
In the event that the noteholder exercises his right to purchase the rights shares, he can acquire these shares at a price equivalent to the rights price plus carrying cost of 4 percent per annum computed from the date of exercise of the stock rights offering up to the acquisition date by the noteholder.
The stock rights offering 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.
A free detachable warrant will also be issued to the noteholder for every 10 notional common shares, excluding the rights shares, regardless of whether or not said investor subscribes to the stock rights.
The exercise will form part of PHA’s P1.02-billion fund-raising for expansion plans. It has likewise raised P300 million from the sale of gaming assets.
Overall, PHA seeks to finance the rollout of cooling solutions firm Concepts Unplugged Business Environment Solutions (CUBES) and the fleet expansion of construction firm Redstone Construction Development Corp., aside from the acquisition of Goshen Land.
“The projected income from these subsidiaries has now transformed PHA into a company with recurring income taking advantage of the high growth in the countryside,” the disclosure said.
For Redstone, some P366 million had been earmarked for capital outlays.
PHA, which has a market capitalization of about P1.22 billion, is an investment holding company which focuses on projects that stimulate the countryside. Its stated mission is to “engage in sustainable countryside development using new technologies and best practices in the fields of food security, natural resources development, life sciences and technology and tourism.”
