URC unloads P7.44B worth of treasury stocks

MANILA, Philippines—Gokongwei-led food and beverage conglomerate Universal Robina Corp. sold P7.44 billion worth of treasury stocks to new investors in an overnight private placement deal on Wednesday, thus raising fresh funds for expansion while widening its public float.

In a disclosure to the Philippine Stock Exchange on Thursday, URC said its board of directors had approved the sale of 120 million treasury stocks at P62 a share, reflecting a 4.8 percent discount to the previous closing price and a 2.3 percent discount to the 30-day volume weighted average price.

CLSA Ltd. acted as sole bookrunner and sole placing agent for the transaction, which widened the company’s outstanding stocks by 6 percent.

Following the discounted pricing of the deal, URC shares fell by 5.6 percent to close at P61.50 a share in Thursday’s trade. This gave the company a market capitalization of P134.31 billion.

“The proceeds of the sale will be used for potential acquisitions and general corporate purposes,” the disclosure said.

The URC shares were crossed through the PSE Thursday, after obtaining approval of the application for a block sale from the PSE. The share sale is expected to be settled on June 19.

Financial magazine FinanceAsia, which reported the deal before URC’s disclosure on Thursday, said about 30 investors participated in the transaction.

It also estimated that this transaction accounted for more than two-thirds of its total treasury stocks.

This left the company holding 46 million treasury shares, representing a 2.2 percent stake.

The deal, the first block trade in Asia since mid-May, “attracted a lot of interest from international funds, allowing the upsize option to be exercised in full and the price to be fixed at the mid-point of the range,” FinanceAsia said.

It noted that the shares were originally offered at a price between P61 and P63.

“The timing of the deal may have been a bit of a surprise, given the current uncertainty about Greece which is keeping many investors on the sidelines, but the market was well aware that Universal Robina had treasury shares that it would be looking to sell at some point,” FinanceAsia said.

As part of its expansion plans, the branded food and beverage company is expanding across Southeast Asia and likewise building a $27-million bio-ethanol plant in its sugar milling complex in Negros Oriental.

The bioethanol plant in Manjuyod, Negros Oriental, the site of its sugar mill Universal Robina Sugar Milling Corp. (Ursumco), will have a daily capacity of about 100,000 liters of fuel bio-ethanol and is likely to be operational by the latter part of next year.

URC also continues to grow its international business, which currently accounts for about a third of its business but is expected to become as big as its domestic operations in about five years. For instance, URC plans to set up operations in Burma.

URC’s international sales increased by 38.9 percent to $443 million last year.

Its two biggest markets—Thailand and Vietnam—accounted for 75.3 percent of total overseas sales.

Originally posted at 03:35 pm | Thursday, June 14,  2012