DOMINION Holdings, Inc. (DHI) is seeking to raise its authorized capital stock nearly ninefold to P30 billion, a move tied to a proposed merger that would give the listed holding company controlling ownership of the firm behind the Tampakan Copper-Gold Project in Mindanao.

In disclosures filed with the stock exchange on Thursday, DHI said its board on Aug. 19 approved and endorsed for shareholder approval the increase in authorized capital stock from P3.42 billion, alongside its proposed merger with Indophil Resources Phils. Inc. (Indophil) and Sonar Holdings Inc. (Sonar), with DHI as the surviving entity.

The company said the proposed capital increase relates to the merger and would also support future capital-raising efforts and expansion programs, which is significant for a company shifting deeper into mining because such transactions can require added flexibility in funding and share issuance as projects move through regulatory and operating milestones.

Under the proposed capital structure, DHI's authorized capital stock would consist of 29.75 billion common shares with a par value of P1 each and 2.5 million preferred shares with a par value of P100 each, up from 3.4 billion common shares and 200,000 preferred shares previously.

The transaction centers on Sagittarius Mines, Inc. (SMI), which holds the Financial and Technical Assistance Agreement covering the Tampakan Copper-Gold Project in South Cotabato. Indophil and Sonar together hold 100% of the voting rights in SMI. DHI said that after the merger, it will hold 100% of the voting rights and acquire controlling ownership in SMI.

"The Board views the merger as a strategic transaction with potential for generating long-term growth and returns for DHI," the company said.

DHI added that the transaction is aligned with its previously disclosed plan to remain a holding company primarily invested in mining companies.

The merger remains subject to several conditions: approval by the stockholders of the constituent companies, confirmation of non-coverage from the Philippine Competition Commission, and approval by the Securities and Exchange Commission (SEC). Those clearances will determine whether the proposed structure can proceed as planned.

DHI shareholders are scheduled to vote on the proposed merger and capital increase at the company's annual stockholders' meeting on Sept. 14.

The company has yet to determine the exchange ratio for the merger. Management was authorized to finalize the ratio in consultation with an independent fairness valuator, which will determine the appropriate values of DHI, Indophil, and Sonar. The number of DHI shares to be issued as part of the transaction has also yet to be determined.

Under the merger structure, the assets, rights, and liabilities of Indophil and Sonar will accrue to DHI, while common shares of DHI will be issued to the shareholders of the two absorbed companies.

DHI is also seeking shareholder approval to deny stockholders' pre-emptive rights over the issuance of shares, which the company said would support future capital-raising efforts and expansion programs.

An annex to the disclosure lists Indophil as owning 40% of SMI and Sonar as owning 31.6%, for a combined 71.6% direct equity interest. DHI's merger disclosure separately states that the two companies together hold 100% of SMI's voting rights.

According to the annex, Indophil has authorized capital stock of P1.116 billion, while Sonar has authorized capital stock of P1 million.

The merger comes as DHI moves to expand its exposure to the mining sector following a change in ownership. The company, formerly BDO Leasing and Finance, Inc., previously held real estate, securities, and other corporate assets and engaged in investment activities involving these holdings.

DHI's first-quarter net income declined by 26.4% to P26.87 million from P36.50 million a year earlier. — A.M.C. Sy