Citicore Renewable Energy Corp. [CREC 3.43, down 2.0%; 16% avgVol] [link] disclosed that its parent company, Citicore Power Inc. (CPI), will sell 346.34 million common shares of CREC to the public ahead of PT Pertamina Power Indonesia’s (PTRPI) acquisition of 2.23 billion primary shares of CREC. The company said that the small private sale would be used to maintain CREC’s public float above the PSE’s minimum public ownership threshold of 20%, since the shares purchased by PTRPI will be considered non-public. The amount that CPI will sell is valued at approximately P1 billion when priced at P3.00/share, which is the price PTRPI paid for its 10% stake.
MB bottom-line: When I did the rough math on the acquisition (before the comprehensive disclosure), it looked to me like it dipped CREC just barely below 20%, but then I thought maybe it was just an artifact of using rounded figures, or if it wasn’t, the actual size of the PTRPI stake would come in just under 10% and be tailored specifically to avoid a float violation. Looks like CREC isn’t taking any chances, and CPI will just do a quick private placement sale to give itself some buffer. Sort of like when a REIT’s parent company does a quick private placement to free up some float for a property-for-share swap.
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