Holding firm Medco Holdings Inc. is embarking on a capital restructuring program to reduce about P867 million in deficit and improve its balance sheet ahead of the entry of a new investor group.
Subject to the Securities and Exchange Commission’s approval, Medco’s par value will be reduced from P1 to 5 centavos.
The reduction in par value is due to the company’s quasi-reorganization and the shares reflected after the reduction in par value did not yet include the amount of shares to be issued by the company to new investors Bonham Strand Investments Ltd. and Xu Hanjiang, Medco said in a disclosure to the Philippine Stock Exchange.
Incorporated in the British Virgin Islands in 2016, Bonham Strand is an investment holding company which will be invested solely in Medco shares and which does not have any other active business pursuits. Xu Hanjiang is principally engaged in personal investing.
Medco’s board earlier approved the issuance to this new investor group of about 2.46 billion new common shares. The new shares will be taken out of the proposed increase in its authorized capital stock from P35 million to P470 million.
The new authorized capital will be divided into 9.4 billion with par value of 5 centavos per share at the issue price equivalent to a par value of 5 centavos per share.
Medco intends to file for the listing of the subscription shares with the Philippine Stock Exchange after the SEC’s approval of the increase in its capital stock.
The company said this transaction would give it a “healthier balance sheet with an increase in its equity and asset base and a decrease in its liabilities.”
Also, Medco said the increase in authorized capital stock would give it the ability to raise more funds by issuing more shares from its unissued shares when so required.
Medco was originally incorporated in 1969 as Mindanao Exploration & Development Corp. and was engaged in mineral exploration and development.