Stockholders okay CHI, CPVDC merger

STOCKHOLDERS of Ayala-owned Cebu Holdings Inc. (CHI) approved yesterday the merger between CHI and its subsidiary Cebu Property Ventures Development Inc. (CPVDC). CHI is the surviving entity.

During CHI’s annual stockholders’ meeting yesterday, Ma. Luisa Chiong, CHI chief finance officer, told the stockholders that the merger would create a “unified story for Cebu investments” as well as create a wider shareholder base, which will increase liquidity of the shares, allowing investors to focus on one listed company.

Moreover, it would pave the way for operational synergies and address the 20 percent minimum public ownership requirements of the Security and Exchange Commission by 2020.

CHI operates residential and retail projects. CPVDC, its subsidiary, operates the office business at the Cebu IT Park.

CHI chairman Anna Ma. Margarita Dy, in a press conference, said the merger would simplify their operations. She assured that they would continue the planned projects of both companies.

“We will operate as before, hopefully now, with a more balanced portfolio with our operations now really focused on running the business because we have simplified our compliance requirement,” said Dy.

After getting the nod of the stockholders’ yesterday, CHI will have to go through three government agencies for the approval—Bureau of Internal Revenue, Philippine Stock Exchange and Philippine Economic Zone Authority.

Once completed, shares of CHI will be issued for the minority shareholders of CPVDC.

The merger terms include a swap ratio of 1.06 CHI shares for one CPVDC share.

The effectivity of the merger will depend on the approval of the SEC, which Chiong said will take some two to three months.

CHI has five estates in Cebu—Cebu Business Park, Cebu IT Park, Gatewalk Mandaue, Seagrove, and South Road Properties.

CHI president Aniceto Bisnar Jr. reported that company revenues grew by 14 percent to P3.1 billion, driven by its leasing business, which accounts for 69 percent.

Net income of the company exceeded the 2016 level by 11 percent to P753.4 million.

Residential sales contributed 11 percent, theater operations by five percent and interest and other income brought in 15 percent.

In the next five years, Dy said they have a number of growth projects as a result of the merger.

Bisnar told reporters that the company’s capital expenditure (capex) this year will be about P1.8 billion to P2 billion depending on the construction progress and P7 billion in the next five years.

CHI invested P2.1 billion in 2017.

“With the merger of the two companies, we will be continuing with the investment programs. Most likely in the next five years, we will be spending another P7 billion in terms of capex,” said Bisnar.

Bisnar noted that the merger will “increase their ability to move farther and faster as they respond to an ever-changing market.” With the merger, CHI’s leasing portfolio is expected to grow almost 2.5 times.

“Our leasing GLA will grow from 250,000 square meters to more than half a million in the next three to four years,” said Bisnar.

“There would be a lot of activities for the merged entity,” added Dy.

Its subsidiary, CPVDC, ended 2017 with growth of 15 percent to P247 million compared to 2016. Revenues grew by 16 percent to P803 million.

CPVDC spent P469 million last year.
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