Tanduay raises P1.68B from equity offering

MANILA, Philippines—Leading rum-maker Tanduay Holdings has priced an ongoing equity offering at P4.22 per share, allowing the company to raise P1.68 billion in fresh funds for expansion.

Tanduay’s equity sale was priced at a discount of 17.2 percent to Tanduay’s last traded price of P5.10 per share as a sweetener to prospective new investors.

The liquor company is offering 398.14 million shares from December 5 to 9 under a place-out scheme that will widen its public float by around 11 percent.

Under the scheme, Tanduay’s majority shareholder Tangent Holdings – in turn controlled by the group of tycoon Lucio Tan — would sell secondary shares to the public. Tangent will use the proceeds to buy exactly the same amount of new shares from Tanduay at exactly the same price as the prior subscription, less the expenses.

This top-up offering is similar to the scheme taken by many other publicly listed companies wishing to take a faster route in widening public ownership, avoiding the tedious registration process if new shares were to be offered directly to the public.

Upon Tanduay’s request, the trading of its shares were suspended starting December 1 until December 14.

The proceeds amounting to at least P1.8 billion will be used to upgrade facilities of wholly owned Tanduay Distillers and the latter’s subsidiaries Absolut Distillers Inc. and Asian Alcohol Corp. and the improvement of the operational efficiencies.

Apart from the bargain pricing of its equity offer, among Tanduay’s proposition to investors is a sustained annual sales growth of 9 percent and a stable market share at 34 percent of the alcohol market. It has a dominant position in the Visayas-Mindanao region with a 77 percent market share. It has likewise made plans to tap new markets overseas, particularly the United States, which has a growing base of rum consumers.