Chemical manufacturer Chemrez Technologies Inc. intends to voluntarily delist from Philippine Stock Exchange as public ownership may fall short of the minimum 10-percent requirement after its consolidation with parent company D&L Industries.
D&L Industries, which owns 34.7 percent of Chemrez, has made a tender offer to purchase up to 850.39 million shares equivalent to 65.3 percent of the latter’s issued and outstanding capital at P6 a share. The tender offer will run until Oct. 3.
All of Chemrez Technologies’ principal stockholders, executive officers and affiliates, have advised that they have already tendered all of their currently owned shares in the offer, the company said in a statement.
If, as result of the tender offer, the ownership falls below the minimum public ownership requirement of 10 percent as required by the PSE for continuing listing, Chemrez is preparing to initiate voluntary delisting rather than wait for the PSE to institute involuntary delisting. There was no intention to turn the company into a listed shell entity, the company stated.
“This offer provides the final attractive opportunity for the remaining minority shareholders to fully realize their profits. Should the company elect to delist and have its shares no longer traded on the PSE, the ability to quickly liquidate the shares may be diminished in the absence of a healthy marketplace. Delisting would certainly reduce the shares’ marketability. Also, trading of shares of a private company entails higher taxes as capital gains tax and documentary stamp tax on every sale, barter, exchange or other disposition of shares of Chemrez shall be imposed,” Chemrez treasurer and chief finance officer Alvin Lao said.
The tender offer is the first step toward the consolidation of the two Lao family-controlled enterprises. The plan is to consolidate Chemrez into D&L by the fourth quarter of this year.
Chemrez’s size in terms of revenues and market cap is not large enough to attract sufficient attention from investors, which the controlling shareholders believe was to blame for lackluster trading and stock market “mispricing.” At the same time, this is seen as an opportunity for D&L to gobble up this affiliate and broaden its portfolio.
From a traditionally resin and powder coating-based company, Chemrez now has various lines of environment-friendly and biodegradable products made from renewable and sustainable raw materials.
Once combined with Chemrez, D&L Industries will have 12 percent of its workforce consisting of food technologists, chemists and engineers who are devoted to research and development.