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Friday, October 10, 2014

Delisting of Chemrez looms after nearly all its shares are sold to DNL

D&L Industries Inc (DNL) completed the acquisition of shares of listed affiliate Chemrez Technologies Inc held by minority stockholders.

In a disclosure to the Philippine Stock Exchange, the food additive maker said it now owns 1.30 billion common shares or 99.7 percent of Chemrez.

Based on the report made by IGC Securities, the tender offer agent, a total of 846.41 million shares had been tendered, representing approximately 65 percent of the issued and outstanding shares of Chemrez.

Prior to the tender offer, DNL held 34.7 percent of the country's leading manufacturer of oleochemicals, resins, and specialty chemical products.

The tendering shareholders will be paid P6 in cash for every share they own for an aggregate cost of P5.08 billion. Short-term borrowings will finance bulk of the acquisition.

“Pre-acquisition, we were net cash. Further, short-term borrowing costs are currently very low - much lower than the overnight or SDA rates – and there are no indications of interest rates going up anytime soon. Hence, there does not seem to be any urgency to refinance and it is possible to just live with debt as short-term,” DNL executive vice president and chief finance officer Alvin D. Lao said.

DNL had a net cash position of P1.45 billion and negative gearing of 0.16x at end-June.

The tendered shares were crossed at the PSE on Tuesday. Settlement will be on Friday.

“In view of the minimum public ownership rule of the Philippine Stock Exchange, DNL would most likely cause the voluntary delisting of Chemrez with the latter’s public ownership falling below the minimum 10 percent,” DNL said.

DNL aims to broaden Chemrez's product portfolio, beef up its capabilities, including cash generation, and boost growth as the specialty chemicals business continues to improve.

DNL is engaged in product customization and specialization for the food, plastics, and aerosol industries. The company's profit rose 22 percent year-on-year to P799 million in the first half of this year, from P655 million in 2013 on stronger volumes across all its businesses.

- Interaksyon

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