Chemphil to get P130 M from sale of LMG stake

MANILA, Philippines - Chemical Industries of the Philippines Inc. (Chemphil) stands to generate more than P130 million from the sale of its majority stake in LMG Chemicals Corp.

“The company will be able acquire funds for short-term and long-term debt servicing, upgrading of the company’s facilities, and for working capital, among others,” Chemphil said in a disclosure to the stock echange.

The buyer, Asian Alliance Investment Corp., will pay Chemphil P131.83 million in cash.

The other component of the transaction is the settlement of Chemphil’s obligations in favor of LMG worth P159.52 million.

Late last month, Chemphil’s board approved the sale of the firm’s entire shareholdings in LMG consisting of 127.58 million shares. The shares for sale represents 65 percent of the outstanding shares in LMG.

“There shall likewise be no tax consequence arising from the transaction on the part of the company,” Chemphil said.

Chemphil has been trying to unload its stake in LMG since 2009. In 2010, Chemphil called off the P354-million sale of its majority stake to Sonato Inc. due to a court case.

In 1995, Ferro Chemicals filed a case against Chemphil in the Makati Trial Court. Ferro Chemicals claimed that Chemphil engaged in the fraudulent act of representing that the Chemphil shares were free from liabilities. The case is now in the Supreme Court following several appeals of both parties.

In 2007, LMG underwent corporate restructuring when it transferred its assets and liabilities to two wholly-owned subsidiaries, Chemphil Manufacturing Corp. and LMG Landco.

LMG subsidiary KPC produces aluminum sulphate for Manila Water Co. and Maynilad Water Services, Inc. while Chemphil Manufacturing makes sulfuric acid, oleum, detergent sulfur, and other industrial chemicals.