SBS Philippines Corp., a chemical trader led by the Sytengco Group, announced on Thursday the disposal of its 65-percent stake in Lence Holdings Corp., a company that has warehouse facilities in the southern part of Metro Manila.
In its disclosure to the Philippine Stock Exchange, SBS said it is selling Lence to Royal Cargo Inc. for P585.03 million.
“The sale of Lence shares will result in substantial cash flow to the company and sales proceeds will be used for its investment in warehouse expansion within Metro Manila for improved operational efficiency, installation of solar energy source for its operation, and reduction of outstanding debt,” SBS said in its disclosure.
SBS owned some 89.05 million shares in Lence, which the listed firm sold to Royal Cargo for P6.569 per share. The company said it based its price per share on the market value of the assets of the subject company as agreed upon by the contracting parties.
In 2017, SBS formed Lence, which was supposed to serve as the acquisition vehicle for the investment in warehouse facility complex.
Lence, which has been reporting losses, is a holding company with investment asset consisting of buildings, improvements and machineries. It also owned subsidiary Benesale Land Inc., which has no operations other than owning 4.7-hectare parcel of land at Silangan Industrial Park on which the facility is located.
“Management considered it to be appropriate time to divest and sell its shareholdings in Lence Holdings Corp. to unlock the share’s maximum value and realize a gain from the transaction. The divestment is aligned with company’s direction to improve operational efficiency through expansion of additional warehouses in its head office located in Quezon City, instead of developing Lence’s property,” SBS said.
SBS reported a net loss of P20.8 million for the three months of the year ending March 31 from last year’s profit of P6.4 million.
Sales for the period fell 38 percent to P174.1 million from last year’s P283.4 million with lower volume sales in feed ingredients and other veterinary inputs. For the period, feeds and other veterinary and agricultural inputs accounted only for 23 percent in the total revenue of the company as compared to 37 percent last year.
Operating profit on a consolidated basis declined by 20 percent to P33.8 million from P42.1 million last year due to limited business activities.