PSE suspends trading of Ferronoux shares amid backdoor-listing play   

The Philippine Stock Exchange indefinitely suspended trading of Ferronoux Holdings Inc. on Thursday following the shell company’s announcement of a P4.31-billion property-for-share deal.

In an advisory, the operator of the local bourse said the swap with Eagle 1 Landholdings Inc. qualified as a backdoor listing, as it would result in a change of control in Michael Cosiquien-led Ferronoux and a “substantial change” in its business.

Under the deal, Eagle 1 will provide three parcels of land beside Okada Manila in Parañaque City spanning 94,144 square meters.

READ: Ferronoux brings in new partner

In exchange, Ferronoux will issue 918 million of its shares valued at P4.70 each, a 12.14-discount from the company’s closing price of P5.35 on Thursday. Ferronoux noted, however, that the transaction price was a 12.49-percent premium over its seven-day volume weighted average price of P4.18 as of Dec. 16.

The PSE likewise cited Ferronoux’s move to issue 240 million more shares to Themis Group Corp. in suspending the trading of the listed firm’s shares.

Themis initially bought 80 million common shares for P1 each, equivalent to a 23.4-percent stake, to support Ferronoux’s business shift.

In preparation for the transactions, Ferronoux will raise its authorized capital stock to P2.5 billion from P550 million with a par value of P1 per share. It will issue 1.46 billion new shares.

Under the PSE’s Revised Backdoor Listing Rules, the trading suspension will be lifted one full trading day after Ferronoux submits a “comprehensive corporate disclosure” about the deal, including a timetable and purpose of the transaction.

This comes after Ferronoux, which has not operated since 2015 after dropping its mining business, confirmed that it will venture into the real estate sector through Themis.

Abel Almario, who was elected a director of Ferronoux as a result of the deal, serves as Themis’ chair and president. Philipe Aquino, also elected Ferronoux director, is Themis’ corporate secretary.

Ferronoux was established in 2001 as AG Finance Inc. to operate as a financing firm and provide short-term, unsecured credit facilities to rank and file employees of local medium-sized corporations.

Two years later, it expanded its operations to include the North America and Middle East markets.

Apart from the change in its primary purpose in 2015, AGF’s board also approved the company’s secondary purpose of engaging in mining and smelting operations to diversify the business.

In 2017, Cosiquien’s construction firm ISOC Holdings Inc. acquired the 67-percent stake held by RYM Business Management Corp. in AGF.

The Securities and Exchange Commission approved AGF’s name change to Ferronoux in 2018. —Meg J. Adonis