LaFarge Cement ups capital to P29.34B

LaFarge Cement Philippines Inc. has obtained the approval of the Securities and Exchange Commission (SEC) to raise its capital to P29.34 billion from P16.05 to offset its liabilities from its parent company.

Based on documents filed with the SEC, Lafarge Cement will issue 54.24 billion shares out of the increase in its capital stock, to Lafarge S.A. of France in exchange for the settlement of long-term debt of P13.56 billion.

Lafarge S.A. recently agreed to sell its local cement unit, Continental Operating Corp. to Republic Cement Corp.

Continental is engaged in the business of manufacturing cement, with plants in Bulacan and Tanay, Rizal.

Republic Cement will finance the purchase with 10-year convertible loan notes that will have a face value of P1.35 billion and carry an interest rate of eight percent a year.

Lafarge can convert the notes to 1.35 billion common shares in Republic Cement, which, if it chooses to do so, will increase its stake in Republic Cement to around 22.3 percent. The French company currently has 239 million shares in Republic Cement equivalent to a 4.13 percent stake.

The purchase will increase Republic Cement’s total cement capacity to 8.5 million metric (MT) tons of clinker a year, the largest in the Philippines. Continental operates cement plants in neighboring provinces of Manila.

Aside from its own plant, Republic Cement owns stakes in seven other cement companies, which prior to the acquisition already formed the second-largest cement group in the Philippines.

Its subsidiaries include Fortune Cement, Premier Cement, Iligan Cement, Mindanao Portland Cement, FR Cement and Lloyds Richfield Industrial Corp.

The proposed combined operations of the group will benefit from streamlined and simplified management and operations in terms of procurement, sales, marketing and distribution; and consolidation of well-established brands and expertise in production and marketing of different products.

Republic Cement will also benefit from a stronger nationwide network, especially in Central and Southern Luzon and Metro Manila, as well as enhanced credit rating as a result of larger market share and asset base.