Lucio Tan. INQUIRER FILE PHOTO
MANILA, Philippines–Businessman Lucio Tan on Wednesday launched a voluntary tender offer priced at a sharp discount to buy out minority shareholders of flag carrier Philippine Airlines and its listed owner PAL Holdings Inc., according to a regulatory filing.
Tan’s offer valued PAL Holdings at P1.19 a share, about 78 percent below the company’s market value before the deal was announced, the filing showed.
For Philippine Airlines, Tan is offering P0.31 a share.
The offer would run through Nov. 19, it said.
The deal, undertaken using two privately held companies owned by Tan, was priced at the “same economic terms” used to acquire conglomerate San Miguel Corp.’s 49-percent stake for over $1 billion last month.
That transaction ended San Miguel’s two-year stint as a stockholder and airline manager of Philippine Airlines.
Tan’s group said the exercise was aimed at offering minority shareholders the same chance to exit PAL as SMC.
However, the intention was to keep PAL Holdings a publicly listed company, Philippine Airlines general manager Jaime Bautista said last week.
In explaining the valuation, Tan’s group said its offer was “significantly higher” than the range of fair values determined by Unicapital Inc., which was hired as independent third-party valuator.
The offer will be conducted through Tan-controlled entities Buona Sorte Holdings Inc. and Horizon Global Investments Ltd., according to a disclosure filed with the Philippine Stock Exchange last week.
Trustmark Holdings Corp., a company controlled by Tan, currently owns 89.78 percent of PAL Holdings which, in turn, owns 98.27 percent of Philippine Airlines Inc.
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.
Earlier this month, Tan’s group signaled that it would take a more conservative stance in running the airline and could defer aircraft orders from France’s Airbus, which were part of SMC’s refleeting program for the flag carrier.
The carrier, which has seen its market share and margins decline partly due to the entry of aggressive budget carriers, is still aiming to end 2014 with a profit, Bautista said in a previous interview.
PAL Holdings posted a profit in the second quarter—a traditionally busy period for airlines due to the summer months.