First Pacific to raise $282-M for ventures in RP

By Lala Rimando, abs-cbnnews.com/Newsbreak

Posted at Oct 17 2009 08:44 AM | Updated as of Oct 20 2009 04:33 AM

MANILA - The parent firm of Philippine-based giants Philippine Long Distance Telephone Company (PLDT) and Metro Pacific Investment Corp (MPIC) is raising at least US$282 million (P13.2 billion) to finance its ventures in Southeast Asia, especially those in the Philippines.

Hong Kong-based First Pacific Company said in a statement posted on its website on Friday that it is raising the amount through a fully underwritten rights issue offered to its existing shareholders.

"We intend to apply the net proceeds in pursuit of First Pacific Group's investment strategies in mining in the Philippines and in Southeast Asia and, if suitable opportunities arise, in infrastructure assets in the Philippines," said Manuel Pangilinan, First Pacific's managing director and CEO, in a written statement.

In October last year, First Pacific acquired its main mining vehicle in the Philippines, Philex Mining Corporation, the  biggest gold and copper miner in the country. (Read: Hong Kong's First Pacific buys 20.16% of Philex)

In the first 6 months of 2009, Philex contributed $2.1 million (about P97 million) to First Pacific’s bottomline. Philex’s net income decreased 47% to P1.17 billion from P2.22 billion last year mainly due to lower copper prices, which have been adversely impacted by the global economic downturn.

About 80% of First Pacific’s assets are invested in the Philippines. Other principal investments include a majority stake in infrastructure and services firm Metro Pacific Investments; and a large interest in telecommunications giant Philippine Long Distance Telephone Company.

It also controls PT Indofood Sukses Makmur in Indonesia.

Mining

“With respect to further investments, First Pacific continues to review mining opportunities given that there are significant mining reserves and a more favorable regulatory environment in the Philippines,” Pangilinan said in the statement to Hong Kong investors.

Pangilinan had said that Philex’s prospects include copper-gold mines in various areas in Surigao province northeast of Mindanao. Philex and another firm have mining rights over areas that Pangilinan said could replace Philex’s premier Padcal mine in the northern province of Benguet, which is seen to exhaust gold, copper and silver reserves by 2017. (Read: First Pacific keen on hiking 20% stake in Philex Mining)

Pangilinan told reporters in a previous briefing that “the new mine appears to be promising. So in the next 2 to 3 years, significant [capital spending] has to be devoted.”

He noted then that new funds are needed for Philex to develop the existing and new mines in Mindanao.

The Hong Kong-based conglomerate currently has about 22% stake in Philex.

In a briefing with Manila-based reporters last August, Pangilinan said First Pacific’s target is to increase their stake in Philex to at least 51%.

Pangilinan and Ramon Ang, the chief executive officer of another Manila-based conglomerate San Miguel Corporation, are considered to be vying for control of the mining firm.

However, shareholders of about 30% of Philex’s shares are unaccounted for, thus the perceived contest between Pangilinan and Ang for the 22% bloc owned by state-run pension fund Social Security System (SSS).

Rights offer


On First Pacific’s fund raising exercise in Hong Kong, Anthoni Salim, First Pacific's chairman and controlling shareholder, has agreed to take all the rights shares that his 44.2% stake entitles him to, according to the company statement.

“This rights issue will strengthen our capital structure and provide us with substantial financial resources to grow the group’s businesses without diluting the existing shareholders’ interest in the company,” Pangilinan explained.

Current shareholders can avail of the right, but not the obligation, to own one share for every 5 of their existing shares.

Shareholders can trade these rights in the Hong Kong Stock Exchange (HKSE) where First Pacific is listed.

The share rights are priced at HK$3.40 each, a 35.8% discount to First Pacific shares’ closing price of HK$5.30 before trading last October 13 was suspended to make way for the rights issue.

The share rights offer represents shares equivalent to about 20% of First Pacific’s existing share capital and about 16.7% of the enlarged share capital.