The banking arm of the Aboitiz Family disclosed details of its upcoming stock rights offering (SRO), during which UnionBank [UBP 95.00 4.40%] will look to sell up to 800 million common shares, at a price between P64.55 and P73.78 per share, with a tentative listing date of May 16.
UBP will finalize the offer price on April 4; the offer will have an ex-date of April 6 and a record date of April 11 and will run from April 25 to May 6.
The SRO shares are coming from UBP’s unissued capital stock, so it does not need to file with the SEC for an increase.
The proceeds of the SRO will be used to fund UBP’s purchase of Citi Philippines’ consumer banking business; the deal has not closed and is still subject to the typical closing adjustments, but the final price for Citi’s assets is expected to come in above P45 billion.
The bank’s main shareholders, UBP, The Insular Life Assurance Co. Ltd., and Social Security System, have all committed to fully subscribe to their respective allocations (and any allocations that are not taken up by other shareholders).
The total amount to be raised by the SRO is between P52 and P59 billion, so UBP should get more than enough equity through the SRO to pay for that massive bundle of Citigroup assets.
UBP can use anything leftover for “general corporate purposes”, which is pretty much just a catch-all for “whatever stuff comes up”.
Maybe baking a little “extra” into the SRO is a good idea, considering the deal includes three full branches, five “wealth centers”, and two “lite” branches, plus around 1,750 employees, some real estate, and Citi’s credit card and personal loans business units.
UBP’s able to move quickly because it’s selling the shares out of a pile of unissued, but authorized capital stock; Solar Philippines NEC [SPNEC 1.93 4.93%] is looking to do the same with its mini-SRO to fund its joint ventures with Enrique Razon’s Prime Infra and Terra Solar.
It doesn’t need shareholder approval to support an authorized capital stock increase, and it doesn’t have to apply to the SEC once that approval is obtained.
It’s easy to see why skipping these steps would be attractive, especially if time is a consideration, as it is here, as the deal is expected to close sometime in the second half of 2022.
Dates and details will be updated on the Merkado Barkada IPO Tracker, so subscribe here to stay informed of any changes. The dates are only tentative at this point.