AGI jacks up stake in Megaworld

Tycoon Andrew Tan-led Alliance Global Group has cemented its controlling interest in property developer Megaworld Corp. by exercising its right to buy P3.07 billion worth of underlying shares attached to warrants held in the last three years.

AGI told the Philippine Stock Exchange on Friday that, with subsidiary New Town Land Partners, it had exercised 3.07 billion Megaworld warrants at the strike price of P1 per share. This allowed AGI to acquire additional common shares in Megaworld at a discount. The company’s last traded price on Friday was P2.36 per share.

The transaction allowed AGI to raise its stake in Megaworld to 65 percent from 56-57 percent, company investor relations officer John Hao said.

The issuance of new common shares of Megaworld to AGI to cover the warrants exercised will dilute holdings of all shareholders by about 12 percent.

The warrants exercised by AGI were part of the 4.1 billion bonus detachable warrants issued by Megaworld in 2009. Megaworld then gave four warrants for every five existing common shares at no cost to all those who subscribed to the company’s P5.1-billion rights offering at that time. Holders of the warrants were given until June 14, 2015, to exercise their right to buy the underlying shares.

The proceeds from the exercise of the warrants were intended by Megaworld to finance its capital and project expenditures from 2012 to 2015.

Based on documents, P1 billion of the proceeds would be used to boost the development of a business process outsourcing (BPO) center in Newport City in Pasay City.

Jose Mari Lacson, research head at Campos Lanuza & Co., said the exercise of the warrants by AGI was expected as the holding firm was “in the money” from this transaction as current market price was more than double the exercise price.  Also, he said, AGI could opt to look for new buyers of the block.  “It’s a decent block to sell and to attract investors,” he said. “But they will need to monetize it as quickly as possible.”—Doris C. Dumlao