FEDERAL Resources Investment Group Inc., the backdoor listing vehicle of courier group LBC, is planning to do a follow-on offering ahead of the backdoor listing of LBC using the dormant company.
In a disclosure to the Philippine Stock Exchange on Monday, Federal Resources said its board of directors on Friday approved to sell up to 69.101 million shares – 10 million new common primary shares and 59.101 million secondary and outstanding common shares.
The pricing – yet to be determined by Federal Resources and LBC – and the target dates for the offering and listing requires the approval of the Securities and Exchange Commission.
Apart from the follow-on offering, the board also approved the acquisition of 1.041 million issued and outstanding shares of stock of LBC Express Inc. from its parent LBC Development Corp. amounting to P1.384 billion. The shares assets will be transferred automatically to the listed firm.
The board also approved the subscription of Vittorio P. Lim, Mariano D. Martinez, Jr. and Lowell L. Yu to 59.663 million common shares each of Federal Resources. The aggregate 178.991 million common shares from the company’s newly-hiked unissued authorized capital stock amounting to P2 billion.
Once the backdoor procedures are done, the listed courier operator will be named LBC Express Holdings Inc.
Last month, Federal Resources moved to increase its authorized capital stock to P2 billion from P100 million to give way for LBC’s entry into the dormant listed firm and backdoor listing.
LBC is a leading cargo and courier service provider in the country, catering to bulk cargo logistics and courier deliveries. It has more than a thousand branches in the Philippines and 60 other branches abroad.
LBC has been planning to debut in the stock market through an initial public offering (IPO). It shelved idea and has since been scouting for a company for a backdoor listing.
The backdoor method of going public is cheaper compared to a normal IPO when listing on the stock exchange. It entails the acquisition or participation in a listed firm – usually dormant companies – and followed by a change of name and corporate purpose.
LBC earlier said it prefers to raise funds through the equities market for expansion in the next few years.
Year-to-date, two companies that listed on the PSE via IPO: the P222-million Crown Asia Chemicals Corp. and P1.15 billion SBS Philippines Corp. The PSE originally expects nine to 10 companies to list on the exchange.
LBC is the only firm that pursued the backdoor option this year, while National Bookstore via Vulcan Industrial & Mining Corp. at a later date.
The IPO hopefuls this year include Datem Inc. (P4.65 billion), D.M. Wenceslao & Associates Inc. (P21.7 billion), Gweilo Corp. (P75 million), Green Power Panay Philippines Inc. (P290 million), Italpinas Development Corp. (P242 million), Metro Retail Stores Group Inc. (P6.1 billion), Philstocks Financial Inc. (P185.89 million), Philippine Primark Properties Inc. (P1.2 billion), and Pointwest Technologies Corp. (P2.09 billion).
The PSE said it is on track to meet it capital raising target of P200 billion for the whole of 2015, with capital raising activities valued at P105 billion registered as of August 15.