LBC firms up backdoor-listing thru FED

DORMANT holding firm Federal Resources Investment Group Inc. (FED) has stuck a deal to bring in the Araneta family’s LBC Development Corp. as a majority investor.

This is seen to pave the way for the long-rumored backdoor listing of courier operator LBC Express Inc. into the Philippine Stock Exchange.

In a disclosure to the Philippine Stock Exchange on Tuesday, FED said it had entered into a deed of subscription relating to the issuance to LBC of 59.1 million shares of the company at an issue price of P1 per share or equal to the par value of its existing common shares. The total subscription price thus amounted to P59.1 million.

“The closing of the share issuance and subscription transaction subject of the deed of subscription is still subject to and conditioned upon the conduct and completion of a mandatory tender offer pursuant to the provisions of the Philippine Securities Regulations Code and its implementing rules and regulations, as well as the payment of the subscription price,” the disclosure said.

FED has about 40.899 million outstanding and listed shares, which means that the issuance of 59.1 million new shares to LBC will give the group a controlling interest.

LBC Express currently holds bulk of all the daily cargo space allocation of carriers Philippine Airlines and Cebu Pacific. It was the first to introduce 24-hour air service delivery in the country. In terms of distribution capability, it has over a thousand branches in the Philippines and over 60 branches in the United States, Canada plus a host of other smaller countries.

The group had earlier wanted to embark on an initial public offering but was sidelined by the woes of an affiliate bank – LBC Development Bank – which was shut down by banking regulators.

In line with this deal, three of FED’s seven directors stepped down from the company and were replaced by representatives from the new investor group. The new directors and officer are Santiago Araneta, Miguel Angel Camahort and Solita Delantar.

Araneta was also appointed as the new chair and chief executive officer of FED effective May 18 while Camahort was named as the new president. The new group has also appointed a new chief financial officer and treasurer in the person of Oscar Torres.