• A P2-B takeover by a P5-M company

    Emeterio Sd. Perez

    Emeterio Sd. Perez

    WITH its paid-up capital of P5 million, CAT Resource and Asset Holdings Inc. (CRAHI) succeeded in taking over Central Azucarera de Tarlac Inc. (CAT) by buying out the holdings of the Cojuangco clan and the public for P1.9 billion.

    The question that may be asked is where CRAHI got P1.9 billion to fully finance its close to P2-billion acquisition.

    Only CRAHI itself and its two stockholders, namely businessmen Martin Ignacio Lorenzo and Fernando Cojuangco, know the answer. Will they volunteer the information on their source or sources of funds?

    I used is the word “volunteer” because CRAHI is not a listed company. As such, it is not covered by the full disclosure rule unlike listed companies. Although there is nothing wrong or illegal in CRAHI’s acquisition of CAT shares, I decided to elaborate on PSE postings to help the public know more about CRAHI, its owners and its capital.

    For the data contained in the following items that were sourced from Securities and Exchange Commission (SEC) documents, I thank the personnel of SEC’s electronic documents department for their help and in giving priority to senior citizens. I intentionally used “department” here because it should be a unit and not part of any department that it has always been.

    Ownership update
    Central Azucarera de Tarlac will hold its first stockholders’ meeting under new its owners on Feb. 26 in Tarlac. As disclosed in an statement, CAT Resource Asset & Holdings Inc., the majority stockholder, owns 20.6 million shares, or 73 percent of 28.2 million outstanding shares. Luisita Trust Fund Inc. remains a significant stockholder, owning 4.7 million shares, or 16.75 percent.

    As CRAHI’s stockholders, Martin Ignacio Lorenzo and Fernando Cojuangco indirectly hold 10.5 million shares or 37.3 percent, and 10.1 million shares or 35.8 percent, respectively.

    Lorenzo and Cojuangco used CRAHI as their corporate vehicle and paid P1.92 billion, at P91 per share, in buying 19.77 million CAT shares or about 70 percent, from the Cojuangco group and in making a tender to buy the remaining shares held by CAT’s public stockholders.

    Takeover vehicle
    The Securities and Exchange Commission approved CRAHI’s registration on July 23, 2014. Three days after, or on July 26, 2014, it signed an agreement to buy out the Cojuangcos of their majority holdings in Central Azucarera de Tarlac.

    As named in a filing, the sellers were Don Pedro Cojuangco family; Jose Cojuangco Jr. family, Reyes family, Teopacio family, Aquino family, and Lopa family.

    CRAHI, with an authorized capital of P20 million, has two subscribing stockholders—First Lucky Holdings Corp. and North Star Estate Holdings Inc.—with 10 million shares each, including shares held by nominees.

    Of their subscribed shares, First Lucky and North Star paid P2.5 million each for total subscriptions of P5 million.

    From Pancake to Lucky Holdings
    Remember Pancake House Holdings Inc.? It used to be the corporate vehicle of the Lorenzos as the majority stockholders of Pancake House Inc. The family sold their listed company to Max’s Group Inc. Available PSE filings showed the Lorenzo-owned holding company owned 143.5 million Pancake shares, or 55.4 percent. At Max’s offer of P15 per share, the Lorenzos grossed P2.15 billion from the sale of their holdings.

    Having lost their right to the Pancake brand, the Lorenzos renamed Pancake Holdings First Lucky Holdings Corp. by amending its corporate charter. The amendment was approved by the Securities and Exchange Commission on May 26, 2014.

    In its latest general information sheet, First Lucky Holdings had P250,000 paid-up capital.

    North Star Estate Holdings Inc. was registered with the SEC on July 11, 2014. As the corporate vehicle of Fernando Cojuangco in his joint venture with the Lorenzos, it has a subscribed capital of P2.5 million.

    Incidentally, Cojuangco’s 50-percent participation in the capital of CRAHI amounted to P2.5 million. North Star also had the same amount for paid-up capital.

    For the final question: What can the public do in a case like this?

    Well, the public must think positive. Why not speculate on the possibility that other investors would be coming in to invest in Central Azucarera de Tarlac and that CRAHI acted only as conduit in buying CAT shares? Should this be the case, CRAHI’s buyout at P91 per share would not be in vain. A CAT share should be worth more than the buyout price because on Feb. 17, when CAT was last traded, it closed at P95.50.

    Moral lesson: The public, though, cannot and must not rely only on regulatory filings submitted by listed companies to the SEC and posted on the PSE website. While PSE postings are accessible for free, in the search for additional documents the SEC charged me P200 for the documents of three companies. Not much compared to using Pilipinas Teleserve Inc., a private company which the SEC has tapped in delivering company documents to moneyed researchers. More on this in a separate piece.



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    1. You are right sir, when you asked the question as to where did this people get the money to buy the shares of stock of the Cojuanco’s. My guess is good as yours.

    2. I have to say you write some brilliant articles but i dont understand them. Its still a little complicated for me.
      I know when i was watching the inquiry into the boy scouts debacle it seems ongpin ( i think thats his name ) bought so many shares for P10 yet they were supposedly trading at between 40 & 70P. He said the shares wernt listed so couldnt be traded, there was a lot more said but i just didnt understand it.
      I was ok in the uk ( well a little ) in understanding shares there but here im really struggleing. If you agree to buy shares in the philippines & you put a deposit on those shares that means no one else can buy them as you are bying them & is there a time limit before you have to pay the full ammount for the shares.