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Axelum channels P1-B IPO funds for loan payment

AXELUM Resources Corp. is redirecting P1 billion from the proceeds of its initial public offering (IPO) for debt repayment as the coronavirus disease 2019 (COVID-19) pandemic made its acquisition and expansion plans ill-timed and risky.

The coconut products manufacturer, which raised P4 billion from its IPO in October, told the exchange Thursday its board of directors had approved the reallocation of some of the proceeds.

The involved funds total P1 billion, consisting of P820 million originally meant to fund strategic acquisitions until 2022, and P180 million that was intended to fund the expansion of domestic and international distribution networks until next year.

“The board decided on the…reallocation due to the effect of the COVID-19 pandemic on the global economy, which makes it untimely and risky to pursue the original intended use of proceeds,” it said.

By using the fund to repay loans, Axelum said it would be able to save on interest expenses it might otherwise incur.

Axelum has not yet reported its earnings for the first quarter. But for 2019, it posted a 113% surge in net income to P775.6 million due to improved gross margins. Its topline was however 10% lower at P5.3 billion due to a global decline in vegetable oil prices.

While it is reallocating funds that were supposed to go to strategic acquisitions and network expansion in the coming years, Axelum said it was “seriously pursuing opportunistic acquisitions that may be available.”

It said it was confident bankers would be more accommodating to finance acquisition opportunities once it had retired its current debt.

Axelum has earlier announced setting aside P600 million for capital expenditures this year, which it will allocate to expanding its distribution channels, upgrading its production equipment and introducing new products.

The company likewise said in March, before the lockdowns started, that it was in preliminary discussions for potential acquisitions.

Axelum has an ongoing share buyback program of up to P500-million worth of common shares. The move began on March 16 and will end on Sept. 16, but may be extended until March 16, 2021. As of June 10, the company has repurchased P105.48-million worth of shares.

Shares in Axelum at the stock exchange shed six centavos or 2.25% to P2.61 each on Thursday. — Denise A. Valdez

Kim Kardashian to host criminal justice podcast

Reality TV star Kim Kardashian West has reached a deal with Swedish music streaming company Spotify Technology SA to host a podcast related to criminal justice reform, a representative for West said on Wednesday. The show, to be available exclusively on Spotify, will be connected to West’s work with The Innocence Project, a nonprofit that fights wrongful convictions, the representative said. Best known for developing beauty and fashion products and chronicling her life with her sisters on TV’s Keeping Up with the Kardashians, West became interested in criminal justice reform after helping to win the release two women from prison. She is currently studying to become a lawyer through a California apprenticeship program. — Reuters

BPI plans bond issuance to help MSMEs

BANK OF THE Philippine Islands (BPI) is eyeing to issue COVID Action Response Bonds (CARE Bonds) for financing for eligible micro-, small-, and medium-sized enterprises (MSMEs) hit by the pandemic.

In a filing with the local bourse on Thursday, BPI said the Securities and Exchange Commission confirmed the planned issuance qualifies as social bonds under the ASEAN Social Bonds Standards in the Philippines.

“In recognition of the significant contribution of MSMEs to the Philippine economy, and as a direct response to their needs as one of the sectors hardest hit by the global pandemic, proceeds from the issuance will be used to finance or refinance eligible MSMEs under the bank’s recently established Sustainable Funding Framework,” BPI said in a filing on Thursday.

Earlier this month, BPI launched its sustainable funding framework which covers projects deemed socially relevant aside from initiatives on the environment. It is an expanded version of the green finance framework it rolled out in 2019.

The planned offering will follow other programs by BPI meant to support MSMEs. These include the loan payment deferral program, the waiver of fees for online fund transfer transactions and the bank’s discussions with state-owned Philippine Guarantee Corp. to refine its loan products for qualified clients.

“MSMEs account for a relatively small percentage of total bank borrowings but a very large percentage of total nationwide employment. Loans to MSMEs go a long way to keeping Filipinos working,” BPI President and Chief Executive Officer Cezar P. Consing was quoted as saying.

BPI raised P33.9 billion from its bond issuance in March, more than six times the initial size issue of P5 billion. The papers have a tenor of one and a half years and an interest rate of 4.05% payable quarterly.

BPI’s net earnings dropped five percent to P6.39 billion in the first quarter from the P6.72 billion logged a year ago.

Its shares ended trading at P73.95 apiece on Thursday, up by 95 centavos or by 1.3% from the previous close. — L.W.T. Noble

Pepsi sells 30.7% stake to Lotte, falls below public float requirement

PEPSI-COLA Products Philippines, Inc. (PCPPI) has completed the sale of P2.21-billion worth of shares to Lotte Chilsung Beverage Co. Ltd., which will result in a breaching of the minimum public ownership requirement of the Philippine Stock Exchange, Inc. (PSE).

In a disclosure to the stock exchange Thursday, the listed company said the South Korean conglomerate successfully bought 1,132,950,431 shares in PCPPI at P1.95 each through a tender offer.

The shares are equivalent to 30.7% of PCPPI’s total issued and outstanding shares, and therefore will result in a reduction of its public ownership to 2.1%.

The PSE requires that publicly listed companies have a minimum public float of 10%. Following PCPPI’s block sale, the PSE implemented a trading suspension on its shares “due to (its) failure to comply with the 10% minimum public ownership requirement.”

PCPPI said it will disclose in the future how it will deal with complying with the PSE’s minimum public ownership requirement.

When Lotte announced its tender offer plan of PCPPI shares in December, it said it wasn’t planning to voluntarily delist the company from the local bourse.

“In the event that PCPPI will no longer be compliant with the minimum public ownership requirement following the completion of the tender offer, trading of PCPPI shares will be automatically suspended by the PSE for a period of six months and, if during the said period, PCPPI is still not able to comply with the minimum public ownership requirement, then delisting will follow thereafter,” Lotte said in its tender offer report.

“If PCPPI is delisted, its common shares will no longer be traded on the PSE and this could affect investors’ ability to liquidate their investments. Also, any capital gains generated from their subsequent sale or transfer will be subject to the prevailing capital gains taxes. Subsequent sale or transfer will also be subject to documentary stamp tax,” it added.

But PSE Chief Operating Officer Roel A. Refran said PCPPI may still raise its public float to 10% to comply. “They may transfer (private placement) shares to a non-public shareholder to bring up the 2.1% float to at least 10%,” he told BusinessWorld through text.

Lotte currently holds a controlling stake in PCPPI. After the transaction, PCPPI said it will remain the exclusive Philippine bottler of PepsiCo, Inc.’s beverage brands, namely Pepsi, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Sting and Aquafina. — Denise A. Valdez

Producer Mackintosh shuts down shows

LONDON — Shows including Hamilton and Les Miserables will not return to the London stage until 2021, producer Cameron Mackintosh said on Wednesday, blaming uncertainty over when the British government would lift social distancing measures. Theaters, cinemas and other entertainment venues were shut down in March as part of efforts to slow the spread of the new coronavirus, which has claimed more lives in Britain than in any other European country. He said he had taken the “heart-breaking” decision to delay the return of his four current London shows, which also include Mary Poppins and The Phantom of the Opera, to ensure that his business could survive. The decision could lead to redundancies for all employees on the productions, and an internal consultation process had begun. “Despite the government engaging with the desperate pleas from everyone in the theatre industry, so far there has been no tangible practical support beyond offers to go into debt which I don’t want to do,” he said in a statement. “Their inability to say when the impossible constraints of social distancing will be lifted makes it equally impossible for us to properly plan for whatever the new future is.” Mackintosh said his companies’ reserves had been massively depleted by the complete closure of the industry, and that he had to take drastic steps to ensure his shows could restart next year. — Reuters

RCBC to tap bond market anew

RIZAL COMMERCIAL Banking Corp. (RCBC) is looking to tap the bond market for the second time this year following its April issuance.

The upcoming issuance will be the fifth tranche of its P100-billion bond and commercial paper program.

“The final terms will be determined prior to the launch of the issue depending on market conditions,” the lender said in a filing on Thursday.

In April, the bank raised P7.05 billion from two-year fixed-rate bonds that carry a coupon rate of 4.848%. Proceeds of the issuance will be used to support asset growth and boost the bank’s liability structure.

Issuances out of the bank’s P100-billion bond and commercial paper program have hit P37.55 billion since 2019.

RCBC’s net earnings surged 77% year on year to P2.3 billion in the first quarter, supported by its strong core business and trading gains despite the coronavirus pandemic.

RCBC’s shares ended trading at P18 apiece on Thursday, down by 20 centavos or 1.10% from the previous close. — LWTN

Alsons earnings soar on full power plant operations

ALSONS Consolidated Resources, Inc. (Alsons) said its first-quarter net earnings reached P310 million, up nearly three times last year’s level, as revenues jumped with the full operation of its Sarangani power plant in Mindanao.

The Alcantaras’ listed holding company told the stock exchange on Thursday its total revenues rose to P2.21 billion during the three-month period, 81.1% higher compared with the P1.22 billion posted in the same quarter last year.

The higher revenue was a result of its 210 megawatts (MW) Sarangani Energy Corp. coal-fired baseload power plant operating at full capacity after its second unit went online in October last year.

Aside from the Sarangani Energy plant, other Alsons power facilities also operated during the quarantine period from mid-March to May.

“Our operations are ongoing and we continue to dispatch power to our various customers in Mindanao,” Alsons Executive Vice President Tirso G. Santillan, Jr. was quoted as saying.

Further, net earnings attributable to parent also went up to P55 million from P6 million in the same quarter a year ago.

Alsons operate four power generators with a total capacity of 468 MW serving 8 million households.

Both its P4.5-billion run-of-river hydroelectric power plant in Sarangani province and the 105-MW San Ramon Power, Inc. baseload coal-fired power plant in Zamboanga City are under construction and are set for commercial operations in 2022 and 2023, respectively.

Alsons is also engaged in property development. It is currently developing a 26-hectare mixed-use township project with Ayala Land, Inc. in Davao City.

On Thursday, shares in the company jumped by 12.09% to close at P1.02 each. — A. J. Ang

Emmy Awards to go ahead

LOS ANGELES — The Primetime Emmy Awards for television, one of the biggest events on the show business calendar, are going ahead in September as planned with Jimmy Kimmel as host, broadcaster ABC said on Tuesday. ABC, part of Walt Disney Co, gave no details for how the Sept. 20 show, which hands out the highest honors in television, would be produced in an era when the coronavirus pandemic has forced the cancellation of multiple live events. “I don’t know where we will do this or how we will do this or even why we are doing this, but we are doing it and I am hosting it,” Kimmel said in a statement. The Emmy Awards are usually held live in Los Angeles in front of an audience of A-list stars and preceded by a red carpet. It had been unclear whether the ceremony would go ahead this year because of restrictions on large gatherings and social distancing requirements. Tuesday’s statement said details of how the show will be produced would be announced soon. — Reuters

Growth of non-banks’ domestic claims eases in Q4

DOMESTIC CLAIMS of non-banks in the last quarter of the 2019 grew at a slower pace, the Bangko Sentral ng Pilipinas (BSP) said.

Preliminary data from the BSP’s Other Financial Corporations Survey (OFCS) showed domestic claims of quasi-banks rose by 9.8% year-on-year to P6.284 billion in October to December 2019 from the P5.72 billion seen in the comparable year-ago period.

This is slower than the 14.4% pace logged in the prior quarter.

The OFCS is an analytical survey of the assets and liabilities of the OFC sector. It uses standardized report forms as required by the International Monetary Fund.

The BSP said growth in domestic claims of non-bank financial institutions came on the back of an expansion in claims on other sectors, despite the decline in net claims on the central government and on depository corporations.

Net claims on the central government grew by 18.8% to P1.466 billion in the fourth quarter of 2019 but slipped by 0.4% from the prior three-month period.

Meanwhile, claims on depository corporations increased 5.2% to P1.613 billion but dipped 0.4% compared to the third-quarter level.

BSP data also showed net foreign assets (NFA) held by other financial corporations jumped 52.8% to P125.6 billion year-on-year and by 25.4% versus the prior quarter.

“This increase in NFA stemmed from the expansion in the claims on nonresidents, mostly in the form of debt securities and foreign currency deposits, and the decline in the other financial corporations’ liabilities to non-residents in the form of debt securities,” the central bank said.

Claims of OFCs on non-residents rose by 1.8% to P267.4 billion after dropping by 10.4% year-on-year in Q3 2019.

On the other hand, liabilities to non-residents plunged 21.4% to P141.8 billion year-on-year and by 7.3% from Q3 2019. — LWTN

Oscars delayed to April

LOS ANGELES — The 2021 Oscars ceremony was moved to April from February on Monday due to the havoc caused in the movie industry by the coronavirus pandemic. The ceremony for film’s highest honors will take place on April 25, 2021, the Academy of Motion Picture Arts and Sciences said in a statement. It had originally been scheduled for Feb. 28. The coronavirus epidemic shut down movie theaters worldwide in mid-March and brought production of films to a halt. The Academy also extended the deadline by which movies must be released in order to be eligible for an Oscar nomination to Feb. 28, 2021, from Dec. 31, 2020. The production shutdown meant that many filmmakers feared their movies would not be finished by the usual year-end Oscar eligibility deadline. Dozens of other movie releases have been moved to 2021. — Reuters

Cebu Pacific ground handling firm cuts over 1,000 jobs

CEBU Pacific’s ground handling service provider 1Aviation Groundhandling Services Corp. (1AV) said it will be laying off over 1,000 employees in its second wave of job cuts, as the coronavirus pandemic continues to discourage air travel.

“Affected employees are over 1,000,” 1AV Human Resources Head Gilbert D. Enriquez said in a phone message Thursday.

He said the company has “close to 5,000” workers.

In April, 1AV also decided to let go of over 400 newly-hired employees, after the government-imposed travel restrictions and the “severe decline” in demand for air travel.

In a statement Thursday, 1AV said that even as passenger air travel has resumed with the easing of travel restrictions, the current number of flights of Philippine carriers is “a far cry” from the numbers last year.

“The decline in demand for air travel and resulting drop in the number of routes and frequencies have directly impacted 1AV, since our core business is ground service support for the aviation industry,” it said.

The company has stopped hiring to deal with the current business environment.

It has also restricted overtime work and deferred salary increases.

The company said the uncertainty brought about by the pandemic “will continue to impact the aviation industry for many months ahead.”

“Most forecasts show that it will take about two years before the aviation industry recovers from the impact of the COVID-19 pandemic,” it added.

“With a heavy heart, we are left with no other recourse but to let go of 25% of our total workforce. Their last day as employees will be on July 20, 2020,” the company said.

Those workers, 1AV said, will be given priority once hiring resumes when business picks up.

In 2018, Cebu Air, Inc., the listed operator of Cebu Pacific, sold 60% of its shares in the ground handling services company to the Philippine Airport Ground Support Solutions, Inc. led by Jefferson G. Cheng. — Arjay L. Balinbin

NPC Alliance settles arrears

ONE of the companies pressed by state-led Power Sector Assets and Liabilities Management Corp. (PSALM) in July last year to pay their arrears has settled its outstanding obligation with the government.

In its website, NPC Alliance Corp. said it had finally settled its P611.36 million outstanding obligation with the agency.

It said company officials had entered into a special payment agreement (SPA) with PSALM regarding its obligation and had paid or settled “most of the outstanding obligation in 2019.”

“The balance will be paid on time, with respect to the terms stated in the SPA,” it said, without giving a breakdown of how much was paid and the amount that has yet to be settled.

NPC Alliance did not state the exact date when the special payment agreement was completed.

Separately, a letter sent by PSALM to NPC Alliance placed the date of the agreement on Oct. 22, 2019 and the payment to the agency on Oct. 23, 2019.

In July last year, the Department of Finance had given 14 companies a deadline of 10 days to pay their overdue obligations amounting to a combined P1.932 billion or face legal actions.

The department said PSALM had sent final letters of demand to the entities, which include a state university, a hotel and electric cooperative. They are mostly based in the provinces.

Finance Secretary Carlos G. Dominguez III, who chairs PSALM’s board of directors, and Energy Secretary Alfonso G. Cusi, who is ex-officio board member, were furnished copies of the letters. — VVS

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