LAGUNA-BASED electronics manufacturer Cirtek Holdings Philippines Corp. is in talks to acquire a local electronics manufacturing firm, a project seen supported by a P2-billion follow-on shares offering.
In an interview, Cirtek chief finance officer Anthony Buyawe said the company was considering acquiring a local firm which was also in the electronics business.
“We’re at a stage of carrying out due diligence,” Buyawe said.
The planned acquisition is one of the reasons why Cirtek is beefing up its capital stock through a follow-on shares offering. The acquisition, however, may be finalized before the offering which is set for the fourth quarter of 2015.
In that case, Buyawe said Cirtek would tap bridge financing.
In a recent disclosure, Cirtek said it had obtained the approval of its board for its plan to raise its authorized capital to P560 million from P400 million at present. The par value is P1 per share.
The plan is for Cirtek to sell at least 100 million common shares, Buyawe said. Based on its current market price of about P27 per share, an offering of 100 million shares will be worth P2.7 billion.
Its board and shareholders actually allowed Cirtek earlier to boost its authorized capital up to P1.04 billion. However, Buyawe said it was not practical for the company to exercise this option, noting that an increase of P160 million in authorized capital would be sufficient. For every increase in capital, Cirtek would have to subscribe to 25 percent of the amount.
For the upcoming follow-on offering by the end of this year, Buyawe said it would be enough to raise at least P2 billion from the sale of about 100 million common shares. Part of the proceeds will be used for the planned acquisition, he said.
Ahead of the follow-on offering, Cirtek said its board had also approved the issuance of additional 300 million preferred shares to Camerton Inc. for a total issuance of 400 million preferred shares at a par value of P0.10 per share. This will be used by the corporation to support the increase in its authorized capital stock.
Camerton is the corporate vehicle of the Liu family, the majority shareholder of Cirtek.
The issuance of preferred shares to Camerton is meant to prevent the dilution of interest given that Cirtek is set to issue new common shares through a follow-on offering. This is seen to ensure that the Liu family will maintain majority control of Cirtek.