Aboitizes sell shipping unit to rival Nenaco

MANILA, Philippines – After more than 100 years, the Cebu-based Aboitiz clan is exiting the shipping business with the sale of its entire stake in Aboitiz Transport System Corp. (ATS) to rival Negros Navigation Co. (Nenaco) for $81.1 million, a deal that will create the country’s biggest shipping company.

The Aboitiz Group, through listed holding firm Aboitiz Equity Ventures Inc. (AEV) and its major shareholder Aboitiz & Co.(ACO) own 77.24 percent and 15.96 percent, respectively, or a combined 93.2 percent of ATS. The remaining 6.8 percent is held by the public.

“The divestment of ATS was a very difficult decision to make considering the Aboitiz Group has been in the transport business for over 100 years. The board of directors, however, felt the Nenaco offer was reasonable and representative of ATS’ value. Reinvestment of the sale proceeds in other identified areas will greatly enhance shareholder value over the long term,” AEV president and chief executive officer Erramon I. Aboitiz said.

 “We are very pleased to transfer the ownership of ATS to Nenaco and its principal shareholder, the Chinese-ASEAN Investment Cooperation Fund, who share the same long term vision we have for the company and appreciate the need for industry consolidation and collaboration to improve efficiencies and lower transport costs,” he added.

With the purchase, Nenaco shall be obliged to make a tender offer to the minority investors of ATS at the same price offered to majority shareholders. Upon completion, the tender offer will value ATS’ equity at $105 million or equivalent to approximately $0.043 per share.

 The sale, which is expected to be consummated on or before Jan. 10, 2011, includes all of ATS’ shipping and logistics businesses that include Superferry, Supercat, Cebu Ferries and 2Go.

 Only the joint venture firms with the Jebsen Group of Norway which are engaged in ship management, manning and crew management and bulk transport, will be spared, AEV chief finance officer Stephen G. Paradies said in a press briefing yesterday.

ATS will sell the joint ventures Aboitiz Jebsen Bulk Transport Corp., Aboitiz Jebsen Manpower Solutions Inc. and Jebsen Maritime to AEV for a total of P355.91 million. It will also sell its 50 percent interest in chartering company Jebsen Maritime Ltd. to ACO for P44 million.

The Aboitiz patriarch, Don Ramon, ventured into shipping in 1907 to transport goods across different islands. The company’s first boat was called MV Picke.

AEV is the publicly-listed investment holding company that handles Aboitiz Power, UnionBank, CitySavings Bank, Aboitiz Transport System, Pilmico Foods Corp. and Fil-Am Foods.

Paradies said proceeds after taxes and related costs will be distributed by means of a special cash dividend equivalent to P0.15 per share to all ATS stockholders of record as of Dec. 15, 2010 to be paid on Jan. 12, 2011

Other proceeds from the sale will be used to support the expansion of AEV’s power, banking and food businesses.

On the other hand, the sale will boost Nenaco’s fleet by an additional 31 vessels and allow the shipping firm to offer a comprehensive range of value-added logistics services to meet the needs of all types of consumers.

Nenaco is sourcing a portion of its funding from an equity investment of the China Asean Marine B.V., a wholly-owned unit of the China-Asean Investment Cooperation Fund. CAF is a private equity fund sponsored by the China Export-Import Bank, targeting investment opportunities in the 10 Asean countries focusing on infrastructure, energy and natural resources.