Singapore-based private equity group Crescent Point is investing $50 million in logistics service provider LBC Express Holdings with a deal to buy debt notes secured by a majority stake in the Araneta family-led company.
In a disclosure to the Philippine Stock Exchange on Wednesday, LBC said its board had approved the issuance of convertible notes worth $50 million in favor of CP Briks Pte. Ltd.
CP Briks is a special purpose vehicle managed by Crescent Point, a private equity and special situations investment firm focused on China, Southeast Asia and Australia. The group’s mission, based on its website, is to deliver attractive risk-adjusted returns for its investors and add value to investee partners to create category-leading companies across sectors and geographies.
Proceeds from the transaction would be used to fund its capital expenditures and working capital, LBC said.
The convertible instrument to be bought by CP Briks could be exchanged for LBC shares to be issued out of the unissued portion of its authorized capital stock. The terms of conversion were not disclosed.
LBC also pledged all of its shares in flagship operating unit LBC Express Inc. in favor of CP Briks to secure its obligations under this transaction, subject to approval of the company’s shareholders in a meeting called for this purpose.
Pending shareholders’ approval of the creation of such pledge, the obligations to CP Briks will be secured by a third party pledge by LBC’s parent company LBC Development Corp. over 51 percent of its outstanding shares owned and held in the listed firm.
Asked why LBC had agreed to a hefty collateral in exchange for a $50-million funding, a spokesperson said the pledged collateral was “aggressive” because LBC was still working on the assumption that it would be able to conduct a subsequent follow-on equity offering.
The disclosure said LBC had entered into an omnibus agreement relating to this transaction, which is still subject to the fulfillment of certain conditions, including final approval of the investment committee of CP Briks.
To date, the convertible instrument has yet to be issued by LBC, which said additional disclosures would be made once the transaction is consummated.
This fundraising comes on the heels of the rejection by both the Philippine Stock Exchange and the Securities and Exchange Commission of a follow-on offering planned by LBC.