Tanduay equity offering priced at P4.22 per share

Leading rum-maker Tanduay Holdings has priced an ongoing equity offering at P4.22 per share, allowing the company to raise P1.68 billion in fresh funds for expansion.

Tanduay’s equity sale was priced at a discount of 17.2 percent to its last traded price of P5.10 per share as a sweetener to prospective new investors.

Wilson Young, managing director of Tanduay, said the offering was priced at a price-to-earnings (PE) ratio of 12.5x, based  on a projected income of P1.2 billion in 2011.

A PE ratio of 12.5x means investors are paying 12.5x the amount of money the company is making in a given period.

The liquor company is offering 398.14 million shares from Dec. 5 to 9 under a place-out scheme that will widen its public float by around 11 percent.

Under the scheme, Tanduay majority shareholder Tangent Holdings, which is controlled by the Tan group, would sell secondary shares to the public.

Tangent will use the proceeds to buy exactly the same amount of new shares from Tanduay at exactly the same price as the prior subscription, less the expenses.

This top-up offering is similar to the scheme taken by many other publicly listed companies that took a faster route in widening public ownership, avoiding the tedious registration process if new shares were to be offered directly to the public.

Upon Tanduay’s request, the trading of its shares was suspended from Dec. 1 to Dec. 14.

The proceeds amounting to at least P1.8 billion will be used to improve the facilities of wholly-owned Tanduay Distillers and its subsidiaries, and to enhance operational efficiencies. Doris C. Dumlao