By Arra B. Francia, Senior Reporter

PHINMA CORP. is investing $50 million into a unit of Vietnamese cement manufacturer Vissai to finance the expansion of its cement plant.

In a disclosure to the stock exchange Thursday, Phinma said it signed a term sheet with Vissai’s subsidiary Song Lam Cement Joint Stock Company and Vissai Chairman Hoang Minh Truong for the investment via preferred shares.

The number of shares, as well as the percentage stake Phinma will have in Song Lam following the investment, is yet to be determined.

The investment entitles Phinma to nominate one member to Song Lam’s board of directors, as well as the chief financial officer of the company.

Under the deal, Phinma will get annual and fixed cumulative dividends of 7.5% from the preferred shares, which can then be converted to common shares.

The listed firm described Vissai as the largest privately owned cement manufacturer in Vietnam which exports to 37 countries, including the Philippines. Its unit Song Lam owns the largest cement plant in Vietnam. It is seen to be a major supplier for Phinma’s 60%-owned unit, Philcement Corp.

Vissai also owns a 30% stake in Philcement.

“The investment proceeds will be used to construct Phase 2 of the Song Lam Cement Plant which will expand manufacturing capacity to 24,000 tons of clinker per day,” Phinma said.

This expansion will double Song Lam’s production capacity, which is mainly focused on exports.

Phinma expects the deal to close within the year following the execution of share subscription agreement and shareholders’ agreement. This is in addition to additional regulatory, government, or corporate approvals.

The company will pay 10% of the investment in advance, while the remaining 90% will be paid upon closing.

The Philippine Stock Exchange, Inc. suspended trading of Phinma shares on Thursday after ruling that the transaction is covered by the Disclosure for Substantial Acquisitions and Reverse Takeovers of the Disclosure Rules. The trading suspension will be lifted on Sept. 20 at 10 a.m.

Shares in Phinma closed at P9.18 each on Wednesday.

Phinma’s net income attributable to the parent dropped 35% to P27.84 million in the first half of 2019, even as gross revenues jumped 26% to P5.64 billion.