Alliance Select Plans Capital Restructuring via P660-Million Share Subscription by Parent Strongoak
Key Takeaways
- •ASFII's board approved a plan on Sept. 2 for Strongoak, Inc. to subscribe to 6 billion common shares at P0.11 per share, worth about P660 million.
- •Reducing the common shares' par value from P0.50 to P0.10 is expected to generate roughly $21.4 million in additional paid-in capital to offset ASFII's accumulated deficit.
- •After the transaction, ASFII expects about 8.5 billion issued and outstanding shares, with Strongoak's ownership stake increasing relative to non-participating shareholders.
- •ASFII will seek Philippine Stock Exchange and other regulatory approvals to list the 6 billion new shares, with a special stockholders' meeting to be scheduled.
- •ASFII shares closed 6.9% higher at P0.31 apiece on Thursday following the announcement.
Alliance Select Foods International, Inc. (ASFII) is seeking stockholder and regulatory approval for a P660-million share subscription by its parent company, Strongoak, Inc., as part of a proposed capital restructuring.
In a regulatory filing on Thursday, ASFII said its board approved the proposed transactions at a special meeting held on Sept. 2.
Under the plan, Strongoak is set to subscribe to 6 billion common shares at P0.11 per share. These shares will form part of ASFII's proposed increase in authorized capital stock.
Ahead of the subscription, the company intends to reduce the par value of its common shares to P0.10 from P0.50. This adjustment would lower its authorized capital stock to P300 million from P1.5 billion, while the number of authorized shares remains at 3 billion.
According to ASFII, the par-value reduction is expected to generate approximately $21.4 million in additional paid-in capital (APIC), which the company plans to use to offset its accumulated deficit, subject to applicable accounting requirements and the necessary approvals. Offsetting an accumulated deficit through APIC is an accounting restructuring mechanism that does not by itself inject new cash, but it can clean up a company's balance sheet and improve reported shareholder equity.
ASFII then plans to raise its authorized capital stock back to P1.5 billion, divided into 15 billion common shares with a par value of P0.10 each.
Once the Strongoak subscription is completed, ASFII expects to have roughly 8.5 billion issued and outstanding common shares, leaving about 6.5 billion authorized but unissued shares. Because the 6 billion new shares would substantially expand the share count, the transaction would also increase Strongoak's ownership stake in the company relative to other shareholders who do not participate, subject to the final terms approved.
The company said it will also seek approval from the Philippine Stock Exchange and other relevant regulators to list the 6 billion shares to be issued to Strongoak.
"The Board likewise approved the holding of a Special Stockholders' Meeting for the purpose of submitting the foregoing matters requiring stockholders' approval for their consideration and approval," ASFII said.
"The record date, date of the Special Stockholders' Meeting, and other material dates relating thereto shall be disclosed separately upon finalization," it added.
ASFII is a Philippine-listed food company engaged in the processing and canning of tuna and other marine products for domestic and export markets.
On Thursday, ASFII shares rose 6.9% to close at P0.31 apiece. — Alexandria Grace C. Magno
