BIZ BUZZ: ‘New and improved’ Vulcan
For some months now, talk in the stock market centered on what would happen to Vulcan industrial & Mining Corp. with the forthcoming entry of the mining company East Coast Mineral Resources Co.
Some market analysts, in fact, believe Vulcan will become a dividend paying stock. And word on the street is that East Coast Mineral has an income stream from its mining claims that are operating in partnership with an established (also listed) mining company.
Thus, it was a bit of a guessing game in the market as to what assets or values East Coast Mineral would infuse into Vulcan.
Biz buzz heard that the official takeover of Vulcan by East Coast Mineral finally took place last week, during the former’s annual stockholders’ meeting.
The name of the listed entity was changed to East Coast Vulcan Corp. and the takeover was basically an asset-for-share swap.
Vulcan received 100 percent of the outstanding stocks of East Coast Mineral, taking control of all its interests in mining, including those operating mine sites. Of course, Vulcan had no commercial operations, and its audited financial statements showed that it had a negative book value of P1.3 million.
As part of the fold-in transaction, Vulcan issued new shares to the stockholders of East Coast Mineral at a par value of P1 per share, which is at a premium. The value of East Coast Mineral—now 100 percent owned by East Coast Vulcan, the new name—was put at P8.5 billion by Asian Appraisal Company Inc.
So why would East Coast Mineral give up all its assets worth P8.5 billion, in return for shares in Vulcan, which has no commercial operations and a negative book value?
Easy. Vulcan is a listed company, and East Coast Mineral can now tap investors—both institutional and public investors—to develop its mine sites with existing mineral production sharing agreements (MPSAs).
As part of its plan, the newly named East Coast Vulcan will operate its own mines, instead of just receiving royalty for its MPSAs.
We’re told East Coast Vulcan is also evaluating plans to put up nickel ore processing plants, possibly in partnership with foreign companies.
We asked around and found that East Coast Mineral was formed in 1995, operates gold and nickel mines, and has long-term partnerships with mining companies.
Our source said that one of those companies is Nickel Asia of the Zamoras, which derived a good portion of its operating income from the mining claims of East Coast Mineral. The man behind the firm is Hilario Pagauitan, a geologist by profession, who worked hard to secure a number of MPSAs from the government.
Those MPSAs are valuable today, because the government stopped giving them out in the past several years. Although the government recently announced that it would resume processing applications for MPSA, none have so far been approved.
Paguitan undertook drilling, exploration and mine development in the mining areas of East Coast Mineral.
He is now mayor of his hometown, Sta. Maria, in Isabela province, which is a fifth class municipality. His is a rags-to-riches story: A probinsiyano who studied in Manila on scholarship to become a scientist.
Imagine that: East Coast Vulcan is now managed by a real miner.
—Daxim L. Lucas
Hand-holding
If we’ve seen more and more companies going public this year, it’s not just because there’s so much yield-chasing liquidity waiting to be harnessed by those brave enough to tap the capital market.
The Philippine Stock Exchange (PSE) leadership has also been working hard to bring new names to the table. Well, they really have to as the local bourse could otherwise lose a big chunk of money to cryptocurrencies (which some people say make equities market boring) or foreign equities.
Apart from easing the listing rules to encourage companies to list on both its main and small, medium and emerging (SME) boards, PSE has launched a hand-holding program for companies that are interested to raise capital, especially the SMEs.
PSE president Ramon Monzon said at a recent presentation to PCCI-Quezon City that there were now 25 companies enrolled in the PSE’s listing assistance program, where the PSE conducts one-on-one sessions to discuss their growth plans and help them take the next steps towards going public.
“We connect these prospective issuers with IPO (initial public offering) advisers from the financial, legal and accounting fields for the preparation of their IPO,” Monzon said.
The PSE has also made it easier for SMEs to access its online prelisting assessment tools to help them evaluate their IPO-readiness and the listing consultation requirements, he said.
Breaking down the IPO candidates into specific industries they are coming from, the consumer space is still the most dominant, with 11 listing candidates now enrolled in the hand-holding program, as these consumer companies seek to ride on the country’s recovery momentum, supported by the reopening of the economy.
There are four candidates each from the property and tech/media/telecom sectors and two each from mining/materials and energy/utilities sectors. There is one candidate from the financial sector and another one from the industrial space.
Hopefully, these candidates—which we presume are good enough if they pass the listing requirements—will leave some money on the table, or price their offerings attractively, and especially attract the local small investors who have just started to discover the ease of participating in IPOs online using the PSE EASy platform.
—Doris Dumlao-Abadilla
RLC goes to Pagadian
Continuing to invest for the long haul, Gokongwei-led Robinsons Land Corp. (RLC) is opening this Friday its 56th shopping mall in the country. It is debuting into Zamboanga del Sur with the opening of Robinsons Place Pagadian, which will add about 25,000 square meters of gross leasable area to its portfolio.
The newest mall in Pagadian, known for its luscious landscape and picturesque terrain, is expected to be at the forefront of commercial life in the area, as it is within the vicinity of the city’s Capitol and famous landmarks Plaza Luz and Legislative Building.
The design of the mall was the inspired by the geometric shapes and colors of the vinta—a traditional outrigger boat used by the locals as fishing vessel, cargo ship and houseboat.
Foot traffic in shopping malls is expected to pick up around the country as the government eases the lockdown protocols amid the decline in new COVID-19 cases and the increase in the vaccination rate.
—Doris Dumlao-Abadilla INQ
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