Tanduay to sell 3B shares to widen public float

Tanduay Holdings Inc., which is being groomed as the umbrella firm of the Lucio Tan group, plans to sell up to 3 billion shares to the overseas market via a top-up placement as part of plans to widen its public float.

Based on Thursday’s closing of P12.40 per share, the shares to be placed out have a market value of P37 billion. The price at which Tanduay will sell the shares, however, has yet to be finalized.

In a disclosure to the Philippine Stock Exchange, Tanduay said it would undertake an equity placement initially with the sale by its controlling stockholder Tangent Holdings of up to 3 billion shares at a price to be determined at the end of a book-building process.

Using proceeds from the sale of those secondary shares, Tangent will subscribe to the same number of new shares of Tanduay in an amount not exceeding the number of secondary shares placed out and likewise at the same price per share.

This means that the transaction will eventually bring in new money for Tanduay as Tangent will only be lending its shares for a quicker equity deal.

The new shares to be issued by Tangent will be listed on the Philippine Stock Exchange, subject to compliance with requirements.

Based on the 3.98 billion existing outstanding common shares of Tanduay, the exercise will dilute existing shareholders by about 75.4 percent.

Jose Mari Lacson, head of research at Campos Lanuza & Co., said taking into account the dilutive impact of this exercise, Tanduay’s shares would be fairly valued at about P20 per share. However, he said that Tanduay got some leeway to issue as much as 5 billion in new shares, which meant that there could be further dilution if the company were to issue more shares.

Given the reported P200 billion valuation of assets to be pooled into Tanduay and maximum of P60 billion in total debts to be assumed, Lacson earlier estimated that this could value the future Lucio Tan conglomerate at around P16 per share.

Taipan Lucio Tan recently agreed to fold into Tanduay all of his major local businesses such as: 90 percent stake in beer brewer Asia Brewery, at least 83 percent of cigarette manufacturer Fortune Tobacco Corp., 98.1 percent of Eton Properties, 49.84 percent of flag carrier Philippine Airlines, 50.97 percent of budget carrier Air Philippines Corp., 34.79 percent of PNB and 27.62 percent of Allied Bank.

Tanduay will be renamed LT Group Inc., which will be under the leadership of Michael Tan, Tan’s son and heir-apparent.