Courier operator LBC Development Corp. has enumerated possible plans for Federal Resources Investment Group, Inc. (FED), a listed shell company it plans to buy, including using it for backdoor listing and investment activities.
In a disclosure to the Philippine Stock Exchange, FED said LBC “is looking into the possibility of making an additional investment to the Company (FED) to fund further business prospects for the Company, subject to favourable market conditions.”
FED said LBC also intends to maintain FED as a holding company through which it can make investments in other companies to generate revenue for FED.
One option LBC is considering is to use FED to consolidate its various businesses into one holding company, according to FED.
Another option is to use FED for the backdoor listing of any of the LBC’s subsidiaries. Backdoor listing is cheaper compared with launching an initial public offering or IPO.
Moreover, LBC is looking at using FED as an investment arm to acquire interests in companies operating within the Association of Southeast Asian Nations in preparation for regional integration.
Lastly, LBC might also use FED as “a vehicle for potential business partnerships in allied businesses which may contribute revenue growth for the Bidder (LBC) and the Company (FED).”
FED said it may achieve revenue growth through capital-raising activities such as bond or debt issuances, borrowings, backdoor listing with follow-on offering, or by tapping into investments from potential partners. However, FED noted that studies are still ongoing and “there are neither concrete plans nor definitive agreements with regard to said options.”
On May 18, LBC executive vice president Santiago Araneta and vice president Fernando Araneta were both elected as directors of FED. Araneta was also appointed as chairman and chief executive officer of the listed company.
FED earlier disclosed that it had entered into a deed of subscription relating to the issuance to LBC of 59.101 million shares of the company at the issue value of P1 per share, or equal to the par value of the common shares of FED, which amounted to a subscription price of P59.101 million.
The deal is, however, “still subject to and conditioned upon the conduct and completion of a mandatory tender offer pursuant to the provisions of the Philippine Securities Regulations Code and its implementing rules and regulations, as well as the payment of the Subscription Price,” FED said.
LBC Development, the parent firm of cargo and courier services provider LBC Express Inc., planned in 2014 to debut on the stock market through an IPO, but dropped the idea to look instead for a dormant company it can use for backdoor listing.
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