Synergy Grid may again push for share swap deal

Danessa Rivera (The Philippine Star) - December 23, 2019 - 12:00am

https://www.philstar.com/business/2019/12/23/1979055/synergy-grid-may-again-push-share-swap-deal

MANILA, Philippines — Synergy Grid and Development Philippines Inc., the listed holding firm of Henry Sy Jr. and Robert Coyiuto Jr., may again push for a tax-free share swap deal after getting shareholders approval.

During the stockholders’ meeting last Friday, shareholders of Synergy Grid approved the share swap without need of a rights offering.

Under the share swap deal, the company will increase the authorized capital stock to P5.05 billion divided into 5.05 billion common shares.

Of the increase in outstanding capital stock, 4.1 billion common shares will be issued at P20.00 per share in exchange for 67 percent of the outstanding shares of OneTaipan Holdings Inc. and 67 percent of the outstanding shares of Pacifica21 Holdings Inc.

One Taipan is owned by Sy and Pacifica21 by Coyiuto. The two companies control NGCP.

But in order to proceed with the share swap, Synergy Grid director and corporate secretary Vicente Gerochi IV said the company has to secure regulatory approvals from the Philippine Competition Commission (PCC), Securities and Exchange Commission (SEC), and the Bureau of Internal Revenue (BIR).

“Now that we have shareholders approval, the first thing we need to do is to get clearance from the PCC because we cannot proceed without the clearance of the PCC. We plan to do that immediately, the start of new year,” he said.

“Once we get that approval, then we can file with the SEC to amend the articles to increase the capital because that is necessary for the share swap,” he said.

The same share swap deal was conducted in 2011 but the transaction was cancelled since they were unable to obtain a tax-free ruling.

This time, the same share swap transaction is being pushed as Sy and Coyiuto see the market as again ripe for pursuing their business interests, Gerochi said.

“We’ve addressed them this time, the regulatory issues from before. Hopefully, we won’t encounter the same problem… hopefully, this time, we have completely complied with a tax free exchange,” he said.

Gerochi said the share swap is meant to combine the interests of Sy and Coyiuto in the National Grid Corp. of the Philippines (NGCP).

“The business of [Synergy] is not contemplated to be limited to NGCP. They also want Synergy to be used as a platform for other investments, consistent with the business of NGCP. It’s a holding company that wants to engage in infrastructure and allied businesses,” he said.

NGCP holds the 25-year concession contract to operate the country’s power transmission network. It is 60 percent controlled by Filipino-owned entities One Taipan Holding Corp.’s Monte Oro Grid Resources led by Sy and Pacific21’s Calaca High Power Corp. led by Coyiuto. The remaining 40 percent is held by State Grid Corp. of China (SGCC) as its technical partner.

Once the share swap is completed, Synergy Grid will only own 40.2 percent of NGCP.

“After the share swap, Synergy Grid will not own 100 percent of OneTaipan and Pacifica21, only 67 percent each. This would translate to a 40.2 percent effective shareholding interest in NGCP,” Gerochi said.