KGLI-NM Holdings, Inc will no longer buy the $30 million worth of Aboitiz Transport System Corp (ATS) common shares owned by Aboitiz & Co, Inc (ACO) and Aboitiz Equity Ventures, Inc (AEV).
In a letter sent to AEV and ACO, KGLI-NM said it decided to discontinue the planned purchase due to constraints in the debt market.
The initial sale was to have been completed April 30. KGLI-NM last year announced its intention to buy ATS for P4.5 billion. But early this year, it disclosed it would only purchase 49%, keeping the option of buying the rest of the company before end September 2009.
The P100-million option money paid by KGLI-NM to AEV and ACO (P82.88 million for AEV and P17.12 million for ACO) has been forfeited and will be reflected on the company’s first-quarter report for release this week.
Stephen Paradies, AEV senior vice president and chief financial officer, in a teleconference last week, said the company understood the decision of KGLI-NM. “We never looked for a buyer for the transaction. The proposal came and we looked at it. We considered KGLI’s offer fair so we proceed with the sale… They asked for time to raise funds and we gave the extension considering the situation in the debt market. But we cannot extend any longer,” Paradies said.
“If an offer comes for the business, we can’t just outright say no. We consider the price whether fair but at this point we’re not for sale,” he added.
KGLI-NM, the local subsidiary of Kuwaiti-based KGL Investment Co, earlier planned to concentrate on the expansion of the logistics and supply chain business of ATS.
ATS controls about 70% of the long-haul passage market and 30% of the cargo market.
In another development, Aboitiz One Inc (Aone) formed a 50-50 joint venture with Kerry Logistics to provide air freight and sea freight services.
Aone is a subsidiary of ATS while Kerry Logistics is a leader in logistics services and supply chain solutions in Asia.
