Manny V. Pangilinan. FILE PHOTO
THE TUG-of-war between the group of businessman Manuel V. Pangilinan and that of tycoon Lucio Tan in the country’s leading sugar firm Victorias Milling Corp. is finally over.
Pangilinan-led First Pacific group has agreed to unload its entire 365 million shares in VMC at P5 each or for a total of P1.8 billion. VMC itself will buy back these shares, as approved by its board of directors.
Based on a disclosure to the Philippine Stock Exchange on Tuesday, the following entities agreed to sell their shares in VMC: First Agri Holdings Corp., Hargate Investments Ltd. and Nestar Investments Ltd. Industry sources said these entities were affiliated with the Pangilinan group.
The block is equivalent to 17.4 percent of the listed shares and 12.5 percent of the outstanding shares of VMC.
In a statement, the VMC management said the buyback of shares would boost the sugar firm’s earnings per share to about 42 centavos from 34 centavos.
“Management constantly pursues ways to enhance shareholder value not only by continuing excellence in operations but also by cutting costs as highlighted in this year’s net income surpassing the P1-billion mark, a record in VMC’s 97 year existence,” VMC said.
“The stock repurchase sends a strong signal that management believes that the future of the company continues to be bright, so much so that it is willing to invest in itself. The company says that the funds allocated for this program are sufficient after considering this crop year’s capital expenditures and cash receipts from operations,” it added.
VMC went into a voluntary trading halt at the Philippine Stock Exchange on Monday, noting that “depending on the outcome of the board meeting, a material announcement may or may not be made.”
The trading halt was sought as the VMC board was deciding on whether to buy its own shares by acquiring the shares of the group that wanted to sell out.
The decision to acquire the shares will allow other shareholders of VMC, including the Lucio Tan group, to raise their holdings in the sugar firm.
For the Lucio Tan group, this will pave the way for the consolidation of its interests in the sugar firm.
To recall, the Lucio Tan and Pangilinan groups had been, for years, scrambling for additional shares in VMC. While the Lucio Tan group was the controlling shareholder for many years through shares held by Tanduay Holdings and Philippine National Bank, Pangilinan’s group gained interest in recent years, perhaps in line with First Pacific’s thrust to invest in agribusiness ventures.
VMC was one of the first companies to seek debt relief during the Asian currency crisis but it was able to turn around its operations and financial condition using a creditor-driven rehabilitation framework.
In the last three years, VMC has been undertaking a program to pay ahead of maturity all obligations under the rehabilitation plan approved by the Securities and Exchange Commission.
On May 31, 2013, VMC fully paid in advance its restructured loans worth P4.4 billion. VMC has also fully redeemed the convertible notes in the hands of its original note holders.
In the meantime, the First Pacific group—aside from investing in VMC—also bought into VMC’s rival, Roxas Holdings Inc., and gained a majority control in this company last year.
Industry sources believe the First Pacific group’s decision to sell out of VMC was made to enable the group to focus its resources on one sugar company where it has controlling interest.
RHI’s board has approved a rights offering of common shares to be offered to common shareholders. The group has also earmarked a capital spending budget of about P1.4 billion for the current crop year to address operational challenges. TVJ