Philtread to raise P1B to fund acquisition of ATR-Kim Eng

Publicly-listed investment holding company Philtread Holdings Corp. will raise nearly P1 billion through a combination of stocks and warrants to partially finance the acquisition of the Filipino-Singaporean investment firm ATR-Kim Eng Capital Partners Inc.

In a disclosure to the Philippine Stock Exchange, Philtread said it will offer to its stockholders five rights shares for every one common share held as of March 19, 2003 at a price of P2 each. The shares, totalling almost 500 million, will be taken out of the increase in the company’s capital stock from P300 million to P1.3 billion of which P1.1 billion are in the form of common shares at P1 par value.

In addition to the 5:1 stock rights, Philtread will toss in one detachable warrant for every five shares subscribed, at no cost to the stockholder. The warrants will be listed simultaneously with the additional shares offered and may be redeemed anytime within two years upon listing.

ATR-Kim Eng itself will act as issue manager while First Metro Investment Corp., which has subscribed to P200 million worth of the offer shares, will act as underwriter. The ATR Holdings Group and Kim Eng Ong Asia Holdings Ltd. will take up the bulk of the offered stocks.

ATR-Kim Eng is a joint venture between local investment firm ATR Holdings and Kim Eng Ong Asia, a Singapore-listed investment company. ATR was established in 1993 as the local arm of the Hong Kong-based Peregrine group before it was acquired in 1998 by local investment bankers Ramon Arnaiz, Manuel Tordesillas and Lorenzo Roxas together with US-based private equity fund Gilbert Global Equity Partners Inc.. In the same year, Singapore stockbrokerage firm Kim Eng Holdings took a 43.03 percent stake in the company.

The stock-warrant offer will complete the entry of the ATR-Kim Eng group into Philtread following its acquisition in mid-2001 of a majority stake in the former tire manufacturing firm. The ATR-Kim Eng group bought out the company’s former controlling owners led by Philex Mining and US tiremaker Bridgestone/Firestone North American Tire LLC.

With the fold-in of the ATR-Kim Eng group, Philtread expects to generate P493.6 million in revenues this year, mainly from insurance, advisory and underwriting fees, with net income estimated to reach P33.3 million for the same period.