Luis Yu group buying 88.54% of BDO Leasing

A new investor group that includes businessmen Luis Yu Jr. and Vittorio Lim is taking over 88.54 percent control of publicly-listed BDO Leasing and Finance (BDOLF).

BDO is selling its controlling stake in this subsidiary as part of the restructuring of its leasing business.

Yu and Lim will each acquire 33 percent of BDOLF. Yu is a director at leading mass housing developer 8990 Holdings while Lim is a director at Pacifica Holdings, which is also led by the Yu family.

Another 4 percent will be acquired by Victor Lim Jr. while other third party buyers will acquire 18.54 percent, BDOLF disclosed to the Philippine Stock Exchange on Monday.

As required by regulation, a tender offer will be undertaken by the new investor group to provide minority shareholders an opportunity to sell their BDOLF shares. The timetable and details of the tender offer will be announced by the buyer in due course, the disclosure said.

The consideration is equivalent to the sum of the sellers’ pro-rata share in the net asset value of BDOLF as of closing date, estimated to be at P5.451 billion and a premium of P400 million.

The actual price per share will be finalized prior to the launch of the mandatory tender offer and upon determination of the net asset value as of closing date of the transaction.

After a careful review of the disclosure, the PSE deemed the transaction covered by the rules on backdoor listing. Trading on shares of BDOLF was thus suspended starting Monday pending compliance with the comprehensive corporate disclosure requirement.

For its part, BDO agreed to sell this subsidiary as part of the restructuring its leasing business to “optimize the financial needs of clients in light of new accounting regulations covering lease transactions.”

International Financial Reporting Standard (IFRS) 16, which took effect in January 2019, requires leases to be recognized on-balance sheet, similar to a loan facility. This makes lease transactions a less attractive option to corporate borrowers compared to the past.

Under the restructuring process, BDO has incorporated a new, privately-held finance company, BDO Finance Corp. (BDO Finance), to provide customers continuing access to lease products and services. Additionally, BDO Finance will assume current lease transactions booked in BDOLF to provide continuity to existing clients.

Meanwhile, clients who now find regular bank loans more attractive vis-à-vis leases are advised to tap BDO’s wide range of products and services.

“We wish to reassure BDOLF clients that their financing requirements will continue to be serviced, and there will be no effective change in their existing lease arrangements that will be assumed by BDO Finance,” said BDOLF president Roberto Lapid.

BDOLF will be re-named and its articles of incorporation and by-laws amended to reflect the new business direction.

The sale transaction is subject to closing conditions, including approval by regulatory authorities.

BDOLF provides its customers direct leases, real estate leases, sale and leaseback arrangements as well as receivables factoring. It likewise provides operating leases through its wholly owned subsidiary BDO Rental Inc. It is among the industry’s dominant players in terms of total assets, capitalization and profitability.