Mining firm acquiring Ramos shell company in backdoor listing deal

East Coast Mineral Resources Co. Inc. (ECMRC) is taking over businessman Alfredo Ramos’ Vulcan Industrial & Mining Co., a publicly listed shell company that was long in search of a buyer.

In a stock exchange filing on Wednesday, Vulcan said gold and nickel mining-focused ECMRC would own 85.5 percent of Vulcan following a series of transactions, including a capital increase, that would be completed before the end of the year.

This was also known as a backdoor listing and would mainly involve an asset for share swap resulting in the transfer of up to 100 percent of ERMC’s shares into Vulcan.

Vulcan made the comprehensive disclosure to shed light on the July 1, 2021 deal it entered into with ECMRC owners, Hilario Pagauitan, ECRMRC chair and CEO and also the mayor of Santa Maria town in Isabela province, and company president, Sofia Pagauitan.

Following the disclosure, the Philippine Stock Exchange said the July 2 trading suspension on Vulcan would be lifted today, July 15, at 9:00 a.m.

ECMRC was incorporated in 1995 and has three mineral production sharing agreements (MPSAs) in Dinagat Islands at the northern tip of Mindanao.

These include an MPSA covering 697 hectares in the municipality of Valencia, Cagdianao and two other MPSAs covering a combined area of 4,475 hectares in the municipalities of Loreto, Osmena and Plaridel and Libjo.

ECMRC receives royalties and commissions from the operators of its MPSA properties.

In an attached financial statement, ECMRC booked a net income of P403 million in 2020—a gain of 77 percent over the previous year. Revenues rose 46 percent to P609.05 million.

Vulcan said the Pagauitan couple, known as the HPG Group, would take over 486.05 million partially paid shares of Vulcan and subscribe to 5.18 billion new shares of the company.

The latter would be paid for using cash and assets, including shares of ECMRC, the filing showed.

The parties are targeting to obtain the approval of shareholders on Sept. 7 and complete the transfer of ECMRC shares on Sept. 30.

The planned capital increase from P4 billion to P12 billion, meant to absorb ECMRC, was expected by the fourth quarter of 2021.

Vulcan, which has no active business operations, said the deal would benefit its shareholders.

Vulcan itself was a potential backdoor listing vehicle for Ramos’ National Bookstore before the family shelved the plan in 2017.

Converge ICT Solutions owner Dennis Anthony Uy made a bid for Vulcan in 2018, but the deal did not push through.