Da Vinci Capital OKs P22.5-B share-swap deal with Cosco

Holding firm Da Vinci Capital Holdings Inc., retail magnate Lucio Co’s backdoor-listing vehicle for his liquor business, has ratified an offer from Cosco Capital Inc. to acquire up to P22.5 billion worth of its common shares through a share swap deal.

The board of Da Vinci has accepted Cosco’s offer to subscribe to 11.25 billion common shares at P2 per share in support of the proposed increase in its authorized capital stock via a share swap transaction, the company disclosed to the Philippine Stock Exchange (PSE) on Tuesday.

This is to execute Co’s plan to inject three of his liquor distribution companies – Montosco Inc., Meritus Prime Distributions Inc. and Premier Wine and Spirits Inc. – into Da Vinci and rename the company The Keepers Holdings Inc., which will be a purely alcoholic beverage retail play.

The group believes that the backdoor listing will unlock the strategic values of the three liquor companies through a listed pure liquor and wine distribution company which will be the platform to further grow and expand the business.

Earlier, Da Vinci approved the valuation of the three liquor companies of Cosco at P22.5 billion to be paid in stocks amounting to 11.25 billion shares at P2 per share in exchange for 100 percent of Cosco’s outstanding shares in Montosco, Meritus and Premier.

The board also rescinded an earlier subscription contract between Da Vinci and Invescap Inc.- which is wholly-owned by Co – to speed up the share swap deal with Cosco.

Invescap owns 85 percent of Da Vinci. It earlier subscribed to 25 percent of the increase in Da Vinci’s authorized capital stock.

Due to the changes in the transaction, Da Vinci will postpone the special stockholders’ meeting originally set for April 8.

Da Vinci intends to issue new common shares out of an increased in its authorized capital stock in exchange for 100 percent of the outstanding shares of Montosco, Meritus and Premier. As a corollary, Cosco will own a controlling equity interest in Da Vinci.

As the transaction will reduce the company’s public ownership, Da Vinci intends to conduct a follow-on public offering of its shares as soon as possible after the completion of the share swap transaction to comply with the minimum public ownership requirement.

Da Vinci is seeking to jack up its authorized capital to P2 billion from P327.6 million. The new capital stock will be divided into 20 billion common shares with a par value of 10 centavos per share. Subject to regulatory approvals, the par value will be changed from the previous 2.3 centavos per share “to make the share price more accessible to individual retail investors and to help improve in trading volume and liquidity.”

Based on the proposed amendment in its articles of incorporation, no stockholder will have any pre-emptive or preferential right to subscribe to the remaining portion of the capital stock.