Aboitiz, one of the country’s biggest conglomerates, yesterday decided to divest itself of its original core business — shipping.
In a press statement, Aboitiz Equity Ventures (AEV) said its board of directors met and voted unanimously to accept the unsolicited offer of KGLI-NM Holdings to buy all of AEV’s shares in Aboitiz Transport System (ATS) for P5 billion, subject to a due diligence audit by KGLI-NM.
The memorandum of agreement between KGLI-NM and AEV and Aboitiz and Company (ACO), executed immediately after the acceptance of the offer by the AEV board, states that KGLI-NM will purchase all of the shares AEV and ACO in ATS on a per share purchase price to be computed based on an ATS equity value of P2.044 per share.
The final terms of the sale will be subject to the due diligence audit and the execution of a definitive share purchase agreement between the parties.
Aboitiz Equity Ventures owns 1,889,489,607 common shares of ATS while Aboitiz and Company owns 390,322,384 common shares of ATS, representing 77.10 percent and 15.93 percent, respectively, of the total outstanding ATS capital stock. ACO is the private holding company of the Aboitiz family and is AEV’s largest shareholder.
The agreement also provides that should KGLI-NM decide to proceed with the purchase, it shall also undertake a tender offer on the shares owned by the minority shareholders at the same terms offered to ACO and AEV in accordance with the requirements of the Securities Regulation Code.
KGLI-NM must also further undertake to pay in cash for such ATS shares acquired under the tender offer. Except for the joint venture businesses in ship management, manning and crew management, and bulk transport of the Aboitiz Group with the Jebsen Group of Norway, the planned acquisition will include all the shipping and logistics businesses of ATS such as Superferry and Supercat.
KGLI-NM will conduct a due diligence audit after the signing of the MOA. On or before November 22, 2008 (the 60th day from the execution of the MOA), KGLI-NM shall notify AEV and ACO whether it will proceed with the transaction. Any definitive share purchase agreement will be executed on closing date, which is expected to occur on January 15, 2009, unless shortened or extended by the parties.
KGLI-NM is a domestic company, which is jointly owned by Negros Holdings and Management Corp.(NHMC) and KGL Investment BV (KGLIBV). NHMC, a domestic company, and KGLIBV, a Dutch company, hold 60 percent and 40 percent, respectively, of the outstanding capital stock of KGLI-NM. KGLIBV is beneficially owned by the KGL Investment Company (KGL Investment), a Kuwaiti company.
Erramon Aboitiz, executive vice president and chief operating officer of AEV, was quoted in earlier as saying that tough times lie ahead for the shipping industry in the Philippines because of escalating fuel and operational costs.
ATS has “right-sized” its fleet to 17 operating vessels. Three Superferrt vessels were sold last year for P2.4 billion to pay off debts. The fleet includes four fastcraft under the brand Supercat.
The Aboitiz business spun out from trading in hemp to shipping, and eventually into power, banking, and real estate.
KGL Investment initiated investments in port and port-related businesses and other logistics related businesses in the Philippines through the establishment of an air-transportation logistics complex in Clark Field, Pampanga, under an agreement signed with the Clark International Airport Corp. in April 2008.
Thereafter, KGL Investment, through KGLI BV, invested in Negros Navigation through the establishment of KGLI-NM Holdings, Inc.
None of the directors, officers or affiliates of AEV has any material relationship with KGLI-NM or any of its directors, officers and affiliates. (/JST)