Aboitiz jump-starts cement business with $400M loan

Conglomerate Aboitiz Equity Ventures (AEV) has tapped a $400 million bridge loan from the Bank of Tokyo-Mitsubishi to fund its foray into the cement business.

The loan will be used to partially finance AEV’s investment in holding companies that were set up for the purpose of acquiring the various Philippine assets and businesses of LaFarge SA, including the cement production and other cement-related businesses and services, the firm disclosed to the Philippine Stock Exchange on Monday.

AEV has teamed up with UK-listed CRH plc to acquire a majority stake in the Philippine cement operations of Lafarge, a move seen to complement its big-ticket infrastructure businesses.

Earlier this month, LaFarge finalized the deal to sell its Philippine unit, LaFarge Republic Inc. (LRI), to the CRH-AEV consortium for around P59.7 billion. The divestment was a consequence of the global merger with another cement-manufacturing giant, Holcim.

AEV, for its part, earlier committed to investing up to P24 billion to this cement venture, suggesting it can get a 40 percent stake in LRI, while CRH can get 60 percent. The sellers agreed to unload shares in LRI at P10.26 per share.

The CRH-AEV consortium intends to delist LRI from the local stock exchange once a tender offer to minority shareholders is completed.  Prior to the tender offer, 88.85 percent of LRI had been committed for sale to the CRH-LRI group.

The only assets to be carved out of the CRH deal were Lafarge Republic Aggregates, Inc. (LRAI) and Star Terminal at the Harbor Center Manila, both of which would be absorbed by Holcim Philippines Inc. and its affiliate, Holcim Mining Development Corp.

CRH is a global leader in the manufacturing and supply of a diverse range of building materials and products. With operations in 34 countries worldwide, CRH is the largest building materials company in North America, a regional leader in Europe, and also has strategic positions in Asia. Its shares are listed on the London and Dublin stock exchanges as well as on the New York Stock Exchange in the form of American depository shares.

For its part, AEV is getting into infrastructure as the fifth leg of its core businesses after power, banking, food, and property development.

“Venturing into infrastructure meets our growth criteria. We are very optimistic of the potential gains this new core business will bring to the group amid the huge demand for infrastructure in the Philippines,” AEV president Erramon Aboitiz earlier said.