The Philippine Stock Exchange (PSE) has suspended trading on tycoon Lucio Co-led Da Vinci Capital Holdings Inc. (Davin) starting Thursday as the latter’s public ownership fell way below the 10-percent minimum requirement.
Davin, which will soon be renamed “The Keepers Holdings Inc. (KHI),” has gobbled up three liquor retailing firms under its affiliate Cosco Capital Inc. for P22.5 billion, becoming the single largest importer and distributor of imported alcoholic beverages in the Philippines.
But with the completion of the share-swap, Cosco now owns 98 percent of Davin, leaving a meager 2 percent in public ownership. The group, however, intends to conduct a follow-on offering to increase this level.
The Securities and Exchange Commission (SEC) recently approved amendments to Davin’s articles of incorporation, increasing its authorized capital stock to P2 billion from P327.6 million. Its new authorized capital consists of 20 billion common shares with a par value of 10 centavos per share.
Yet to take effect
The SEC likewise approved a change in its corporate name but the change in name and adjustments relating to the change in par value have yet to take effect in PSE.
In support of the increase in authorized capital, 11.25 billion common shares of stock of Davin were issued in exchange for Cosco’s 100 percent shares in liquor firms Montosco Inc., Meritus Prime Distributions Inc. and Premier Wine and Spirits Inc.
As the share-swap took into effect upon the SEC’s approval of the capital hike, this resulted in Davin’s public ownership level falling below the required minimum percentage, prompting the PSE to suspend trading on this company.
The Co group believes that the transaction will unlock the strategic values of liquor companies through a pure liquor and wine distribution listed company, seen to be the platform to further grow and expand the business.
From 2017 to 2019, combined volumes of these three entities posted a compounded annual growth rate (CAGR) of 37.45 percent.
Record volumes translated to a 2017 to 2019 CAGR of 26.82 percent in revenues and 38.59 percent in net income. In 2020, Davin noted that despite the imposition of liquor bans amid the pandemic, cost-saving measures mitigated the adverse impact on combined net income, which decreased by only 3.2 percent.
During Davin’s stockholders’ meeting at end-May, Davin president Jose Paulino Santamarina explained the rationale behind the company’s change in corporate name.
“By definition, keeper is someone to whom trust is placed for the care of something. It also means someone or something with good qualities, whom you can have long relationship with and also something worth keeping,” he said.
“Taking it closer to our business, a keeper is an honor given to a person who has shown outstanding achievement and commitment to the Scotch whisky industry. Our beloved chair was bestowed this title by the exclusive, by invitation, international society of the Keepers of the Quaich based in Scotland for his notable contribution to the industry. These are the inspiration for the name,” he added.