DMCI Holdings Inc.’s shareholders formally approved Tuesday the sale of P10 billion worth of preferred shares to Dacon Corp. that will be used in the acquisition of cement firm Cemex Holdings Philippines Corp.
At the company’s special stockholders’ meeting yesterday, Isidro Consunji, DMCI chairman, said the issuance of preferred shares to Dacon will not dilute the voting rights of existing shareholders and will improve the company’s balance sheet.
“The primary consideration for funding the acquisition is to optimize the financing costs and limit the impact on common shareholders’ dividends while providing mutual benefits for the investors and the company with fixed interest rates,” he said.
Consunji said the preferred shares’ dividend rate will be at 4 percent, while the management commits to at least 25 percent of the previous year’s permanent income to common shareholders.
The convertibility feature of the preferred shares “provides the flexibility in managing the capital structure and optimizes the cost of capital,” he added.
Dacon has the option to convert its holdings to common shares at a valuation of 30 percent premium over the volume weighted average price of the common shares over a 30-day trading period before the conversion date.
Dacon will buy the preferred shares through a private placement.
The Consunji Group in April announced plans to purchase Cemex through the acquisition of Cemex Asian South East Corp. (CASEC) for $305.6 million, through the consortium of DMCI, its unit Semirara Mining and Power Corp., and Dacon.
CASEC is Cemex’s direct mother company under the Mexican cement group, Cemex SAB de CV, umbrella and owns 89.86 percent of the local cement manufacturer.
Late last month, Dacon issued a tender offer to the publicly owned shares in Cemex at P1.42. The tender offer will run between October 23 and November 21 this year.
The group, however,has expressed intent to keep Cemex listed even if more shares were tendered through the tender offer.
DMCI said in case Cemex’s public float falls below the 10 percent minimum threshold following the contemplated mandatory tender offer, Dacon “intends to sell a portion of its CHP shares in order to maintain public listing with the Philippine Stock Exchange.”
“We anticipate that the said sale of the CHP shares by Dacon Corp. would happen within six-months after the acquisition of Cemex Asian South East Corp. (CASEC), which is expected to close by the end of November,” DMCI said.
