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MANILA, Philippines—Businessman Lucio Tan has excluded flag carrier Philippine Airlines and budget airline Air Philippines Corp. from the roster of core businesses to be infused into Tanduay Holdings Inc. ahead of a major equity offering and transformation of the company into a holding company to be known as LT Group Inc.
In a disclosure to the Philippine Stock Exchange on Wednesday, Tanduay said its board had approved the deferment of its acquisition of the airline business. However, Tanduay’s board agreed to proceed with the purchase of up to 100 percent of Fortune Tobacco Corp., Asia Brewery Inc. and two companies that control Eton Properties Philippines—Paramount LandEquities Inc. and Saturn Holdings Inc.
The infusion of a non-controlling interest in Philippine National Bank and Allied Banking Corp. is also proceeding as planned.
On the other hand, the deferment of the infusion of PAL and AirPhil Express will reduce the total assets to be infused into the future LT Group to P115.5 billion from the earlier disclosed estimate of P236.5 billion. But the airlines being a capital-intensive business that requires heavy borrowings, the deferment will also reduce the liabilities to be absorbed by the LT Group.
Under the original plan, the LT Group was supposed to fold in 49.84 percent of PAL (post-recapitalization) and 50.97 percent of AirPhil Express into Tanduay. The airline business, now under the management of San Miguel Corp., is embarking on a major refleeting program meant to boost market share and long-term profitability.
Tanduay estimated that consolidated net profit in the first nine months amounted to P5.7 billion on the back of P20.8 billion. This estimate already carved out the airline units, the source said. Group-wide operating income amounted to P1.8 billion while other income amounted to P4.4 billion.
Total liabilities amounted to P50 billion while total equity was estimated at P65.5 billion of which P65.3 billion was attributable to the Lucio Tan group.
Tanduay has asked the PSE for a grace period until March 2013 to beef up its public ownership which will fall to 5 percent versus the 10 percent minimum requirement after the consolidation into the company of various core businesses.
But a subsequent follow-on offering of three billion common shares planned by the future LT Group is expected to jack up the public float to 29 percent.