Closing of SMC, Cosmos sale deferred for another week

The closing of the sale of softdrink firm Cosmos Bottling Corp. (CBC) to the San Miguel group has been deferred for a week as both parties (RFM and SMC) work out the final details in the contract conditions.

As such, RFM Corp. said its planned buy-out of the 20.7 percent stake held by WP Argosy Ltd. in RFM for P1.12 billion will also be put on hold since the financing for the buy-back will come from the proceeds of the Cosmos sale.

In a disclosure, RFM vice president Ramon Lopez informed the Philippine Stock Exchange that the target closing date for the Cosmos transaction, which was tentatively scheduled on the third week of December 2001, has been deferred to next week pending completion of closing requirements.

SMC, through its own softdrink unit Coca-Cola Bottlers Philippines Inc., has acquired the 83.2 percent interest of RFM in Cosmos and will eventually make a tender offer to the remaining minority stockholders to complete the purchase valued at P14 billion.

With the expected proceeds from the sale, RFM has embarked on its own share repurchase program, eventually buying out New York-based WP Argosy, a major player in the area of private equity funding worldwide.

WP Argosy has been in RFM for the past two years and its desire to sell its shares back to RFM was intended to consolidate and rationalize its investment positions in the aftermath of the Sept. 11 event, according to Lopez.

"We were told that they are studying other investment opportunities in the region," he added.

RFM, on the other hand, views the transaction also as a means to improve the value of the remaining RFM shares that will benefit the shareholders.

RFM will repurchase 408,772,385 common shares owned by WP Argosy for P2.75 each by way of treasury shares. The exit price is about 15 to 20 percent premium to market and is negotiated amount in consideration of WP Argosy’s valuable contribution in the last two years to RFM.