Tan to buy out PAL minority owners

MANILA, Philippines - The Lucio Tan Group has offered to buy out the minority shareholders of national flag carrier Philippine Airlines Inc. (PAL) at a steep discount as it formally launched a voluntary tender offer.

In a disclosure to the Philippine Stock Exchange (PSE), PAL Holdings assistant corporate secretary Ma. Cecilia Pesayco said Tan’s Buona Sorte Holdings Inc. and Horizon Global Investments Ltd. offered to buy out the minority shareholders of listed PAL Holdings at P1.19 per share and that of PAL at P0.31 per share.

The voluntary tender offer price represents a 77.5- percent discount as shares of PAL Holdings closed at P5.30 per share yesterday.

Minority shareholders have until Nov. 19 to sell their shares in PAL Holdings and PAL and the settlement date is scheduled on Nov. 24.

The Tan Group through Buona Sorte and Horizon Global Investments bought back the 49 percent interest of San Miguel Equity Investments Inc. of San Miguel Corp. (SMC) last Sept. 15 for $1.3 billion.

SMC bought a 49-percent stake in Trustmark Holdings Corp. in April 2012 for $500 million and then embarked on an ambitious massive fleet renewal program involving the acquisition of 100 brand new aircraft.

Trustmark owns and controls 89.78 percent of the issued and outstanding shares of PAL Holdings that owns 98.27 percent of PAL.

“This voluntary tender offer is intended to provide the minority shareholders of PAL Holdings and PAL with the opportunity to monetize their investment and divest their shareholdings in these companies,” the companies stated in the summary of terms of the voluntary tender offer.

The Tan Group has committed to keep PAL Holdings listed at the PSE as it intends to comply with the 10-percent minimum public float requirement of the exchange once the voluntary tender offer is completed.

PAL Holdings resumed trading in July 12 last year after complying with PSE’s 10 percent minimum public float rule. It managed to increase its float to 10.22 percent after selling 2.41 billion new shares to private investors.

PAL general manager Jaime Bautista earlier said the voluntary tender offer is not for the purpose of delisting PAL Holdings.

Based on the rules of the Securities and Exchange Commission (SEC), he explained that PAL is not mandated to conduct a mandatory tender offer as the transaction did not involved a change in control in the company.

“Under existing SEC regulations, a company that purchases more than 35 percent of a listed company in order to gain control has the obligation to comply with the mandatory tender offer requirement,” Bautista said.

According to him, there was no change in control of Trustmark Holdings and the extent of beneficial ownership of PAL and PAL Holdings.

“The purchase price for the voluntary offer shall be based on the same economic terms as that given by Buona Sorte and Horizon Global Investment to SMEII Trustmark shares,” he added.