Cement manufacturer Lafarge Republic Inc. (LRI) went on voluntary trading suspension yesterday to curb the risk of exceeding the 40-percent maximum foreign equity limit after a share buyback program by parent Southeast Asia Cement (Seacem).
Seacem earlier launched a voluntary offer to buy back up to 93 percent of its own shares using as payment a mix of cash and shares in LRI, where it controls a majority stake.
In a disclosure to the Philippine Stock Exchange, LRI said it was informed that Seacem shares tendered for the exchange with LRI shares included foreign-owned stocks. In order to avoid the risk of LRI exceeding its 40-percent maximum foreign equity on cross date on Monday, LRI requested that trading of its shares on the PSE be suspended immediately. The trading of LRI shares will resume on Nov. 19.
Seacem’s move is seen allowing LRI to widen its public float as the parent firm will trim its stake in LRI by using the shares as its currency to pay for the Seacem shares that the company will buy back. On the other hand, the buyback will reduce Seacem’s public float.
A stock dealer said the transaction seemed to be designed to allow LRI to meet the 10-percent minimum public float required by the PSE for continued listing while Seacem itself might decide to delist.
Based on an earlier disclosure, the board of Seacem approved the buyback of a total of 989.34 million shares in exchange for Seacem’s shares in LRI at an exchange ratio of 3.73 Seacem shares for every LRI common share. The shares can also be bought back for a cash amount of up to 2.8 centavos each.
Earlier, Seacem sold a 2.3-percent interest in LRI to local institutional investors for P1.14 billion. The transaction beefed up LRI’s public ownership to 6 percent from 3.7 percent, which still fell short of the PSE requirement.
LRI is one of the 27 publicly listed companies facing trading suspension on the first trading day of 2013 if they are unable to meet the minimum public float requirement. But the company had said it was confident of meeting the 10-percent public float requirement before the year ends.
An associated company of international building materials leader Lafarge, LRI earlier announced plans to increase its production capacity in the first quarter of 2013, supplying an additional one million tons of cement annually throughout the Philippines after a set of investment projects has been completed. LRI is investing to revamp its Danao, Cebu, grinding plant and to ease bottlenecks in its Norzagaray (Bulacan) mill. Doris C. Dumlao