Cosco Capital plans $500-M share sale

MANILA, Philippines - Cosco Capital Inc., the investment holding firm of retail tycoon Lucio Co, is preparing a $500-million sale of existing and new shares to increase its public float and beef up its liquidity, the International Financing Review (IFR) of the Thomson Reuters Group reported yesterday.

Cosco Capital, formerly Alcorn Gold Resources Corp., has started a non-deal roadshow which will be followed by the equity offering after the meeting with investors, IFR said.

The transaction includes the sale of $300 million worth of new shares and the remaining from existing shares, IFR said, adding that Cosco Capital has tapped Deutsche Bank and JPMorgan for the offering.

Officials of Cosco Capital, which has transformed itself from being a petroleum exploration company into a holding firm, were not immediately available for comment yesterday.

The capital-raising program came barely a week since Cosco Capital announced that it needs P12 billion (around $293 million) to take advantage of growth opportunities and pay existing debts.

The listed holding firm is banking on robust consumer spending as it expands its grocery, commercial real estate and liquor distribution businesses.

In a regulatory filing last week, Cosco Capital said it will spend P6 billion for the expansion of its real estate portfolio, including investments in Puregold-anchored properties, distribution centers and oil storage facilities.

Another P3 billion will be allotted for debt refinancing and P2 billion for the “expansion into non-food specialty retail through merger and acquisition and organic means.”

Cosco Capital also allocated P1 billion “for working capital investment for rapidly expanding liquor distribution business.”

The Co family injected into Cosco Capital its 51-percent stake in Puregold Price Club Inc. and a portfolio of liquor distribution companies, commercial real estate firms and an oil storage business.

With the transaction, the Co family now owns 93.4 percent of Cosco Capital, up from 67 percent as public investors’ shares were diluted to 6.6 percent from 33 percent.

“Retail and liquor distribution businesses hold leading and dominant market positions in their respective sectors in the Philippines,” Cosco Capital said of its grocery unit Puregold and imported brands of wine, spirits, beer distributors Montosco, Meritus, Premier Wine and Spirits.

Puregold, the country’s second largest grocery chain, is set to put up 25 new stores per annum for the next three years while looking to acquire more supermarket players.

Cosco Capital said commercial property lessors and developers Ellimac Prime, Pajusco Realty, Cosco Prime, Pilgor Development Services and 514 Shaw Property Holdings Inc. have a 96 percent average occupancy rate over the last three years.

Aside from consumer-related businesses, Cosco Capital also owns Pure Petroleum Corp., a lessor to a number of petroleum companies of oil storage tanks and facilities inside the Subic Bay Freeport Zone in Olongapo City.

“Defensive and profitable oil storage and mining businesses provide stable cash flows,” Cosco Capital said.