DMCI to sell P10B in prefs to family affiliate Dacon

DMCI Holdings [DMC 11.10, down 3.3%; 242% avgVol] [link] disclosed that the Consunji Family’s private holding company, Dacon Corp., will be subscribing to 10 million Class B preferred shares from DMC at an issue price of P1,000/share, for a total investment of P10 billion. Dacon will pay DMC for the preferred shares in a lump sum or in installments, but in either case, the terms of the deal require Dacon to have paid fully before the closing date of DMC’s purchase of Cemex Philippines [CHP 1.42, down 1.4%; 58% avgVol] from its foreign-based parent company. Dacon’s new preferred shares will carry a 4% annual yield based on the purchase price, to be paid out in quarterly dividends. The preferred shares are perpetual, meaning that Dacon will be able to receive this dividend indefinitely until DMC chooses to redeem the preferred shares at the purchase price. Dacon has the option to convert the preferred shares to common shares at a conversion price that is set at a 30% premium over the volume-weighted average price of DMC’s shares for the 30 days prior to the conversion date.

MB bottom-line: All of the regulatory issues are gone and all that’s left is to pay the money and get the thing. As a construction and infrastructure business, DMC can easily integrate CHP into its development plans in a way that just makes a lot of mutual sense. The group still needs to get SEC approval for the prefs sale and the final pen strokes will need to be applied by DMC’s shareholders at their upcoming October 15th meeting, but once that’s done, the Consunji Family will have everything it needs to get its newest asset.

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.