050107: By the rule: Lopezes to 'invest' P4.97B in City Resources

BEPRES Holdings Corp., First Gen Corp., First Philippine Holdings Corp. and ABS-CBN Holdings Corp. have at least three things in common. One, as their corporate identities suggest, they are all holding companies. Two, the Lopezes are their majority stockholders, who own shares through their corporate vehicles. And three, they are listed on the Philippine Stock Exchange (PSE). These similarities also apply to another Lopez-controlled company, but which has long been missing from the PSE board. The name of the company, City Resources Corp., may not be a familiar name among new market investors. But not to a few investors such as Ateneo Scholarship Foundation Inc., which still holds 914,667 CRC shares, and stockbrokers and their clients, who have been stuck with their CRC shares since 1994 and had probably forgotten everything about them. These small investors own a total of  7,979,840 shares of 95 million outstanding and issued shares of City Resources. As majority stockholders, the Lopezes own 87,020,152 shares, or 91.60 percent of 95 million outstanding CRC shares. These are listed in the name of Time Engineering Berhad, a Malaysian firm, as record stockholder, but of which Lopez  Inc. is the beneficial stockholder. Lopez Inc. is the family’s unlisted holding company, which, in turn, “is owned by the respective holding companies of the families of Oscar M. Lopez, Manuel M. Lopez and Presentacion L. Psinakis.”   * The good news. The ownership of the Lopezes over 87,020,152 CRC shares resulted from a purchase agreement dated December 27, 1996 covering 7,515,850 fully paid shares of Starfields Holdings Inc. and 79,504,310 shares held by Time Engineering Berhad, including those held by nominees. Here is the good news to the public stockholders who hold the equivalent of 8.40 percent of outstanding shares: They may want to sell their CRC shares via a tender offer, which the Lopezes are planning to undertake after the annual stockholders’ meeting on May 11, 2007, which, if successful will make City Resources a 100-percent subsidiary of Benpres Holdings Corp. The tender offer price has not been decided yet. Before biting into this offer, they may want to think twice, or even longer, because their company will undergo rehabilitation and will soon acquire assets that will make it a holding company that it really is and should be. Under a company-initiated rehabilitation plan, City Resources will get the assets it needs that are too valuable, in fact, for Ateneo Foundation to ignore by selling out to the either Benpres.  * Capital buildup. From mining as it prime activity, Manhattan Mining Corp. assumed a new corporate name to reflect its new business thrust. As a holding company, City Resources failed to take off and the trading of it shares was suspended. It was last traded on May 17, 1994,  when it closed at P8.50. To those who failed to beat the trading suspension and did not sell at P8.50,  the most welcome news is the plan of City Resources to raise its authorized capital stock to 5.4 billion shares at P1 par from 335 million shares. The capital stock expansion is intended to accommodate the subscription by the Lopezes to 4,969,670,636 shares paying them with 29,497,324 shares in another family-owned company. In a filing, City Resources said Benpres will pay its subscription to 2,435,579,607 CRC shares  with14,453,689 shares it owns in unlisted First Philippine Infrastructure Development Corp. while First Philippine Holdings Corp. will swap its 15,043,635 FPDIC shares with 2,534,091,029 CRC shares. The swap translates to P168.509 per share for Benpres’s FPIDC shares and P168.449 per share for FPHC-owned FPDIC shares computed at P1 par value of CRC shares. FPDIC, formed in 1994, is the Lopezes’ vehicle for road infrastructure projects in which Benpres owns 49 percent and FPHC, 51 percent. In turn, FPDIC owns 61 percent of Manila North Tollways Corp; 46 percent of Tollways Management Corp. and 100 percent of Luzon Tollways. Together, Benpres and FPHC will “infuse” P4,969,670,636 in CRC shares. The subscribed shares of the two holding companies will raise the outstanding shares of City Resources to 5,064,670,636 shares leaving 335,329,364 shares for future issuances. The question is: Are the Lopezes reserving these for CRC’s small shareholders should they be allowed to exercise their preemptive rights?

 

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