Is Holcim Philippines Delisting from the Stock Market?
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On Thursday (June 29), cement company Holcim Philippines Inc. (HPI) announced that it is studying the possibility of delisting from the Philippine Stock Exchange (PSE) after one of its shareholders increased its stock in the company, thereby diluting its public float to levels below that of the required level to maintain its status as a public company.
As of December 31, 2022, HPI is 60.55 percent owned by Union Cement Holdings Corporation (UCHC), 18.11 percent owned by Holderfin B.V. (Holderfin), and 7.08 percent owned by Cemco while the remainder of its shares (14.27 percent) is owned by the public.
According to HPI, Holderfin BV, a financial services company based out of the Netherlands, had purchased a total of 594,952,725 common shares from Sumitomo Osaka Cement Co., which represents 9.22 percent of HPI’s outstanding capital stock. This raises Holderfin’s total shareholdings in HPI to 27.33 percent from the previous 18.11 percent.
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The sale also means that HPI’s total public float has now decreased from 14.27 percent of its outstanding common shares as of March 2023 to just 5.05 percent.
According to PSE rules, all publicly listed companies are required at all times to maintain a minimum percentage of listed securities held by the public (or public float) of 10 percent or higher. In August 2022, however, the PSE mandated that all companies making their PSE debut are required to sell from 20 percent to 33 percent of their total shares to the public.
Should HPI be unable to issue additional shares to the public to raise its public float to the required level, Holderfin said it would make a tender offer to purchase all of the remaining common shares of the company. This would essentially mean the voluntary delisting of HPI from the main board of the PSE and turn it into a private company.
According to HPI’s statement, it is “carefully evaluating the feasibility and potential benefits of pursuing the Voluntary Delisting.”
HPI is a member of the Holcim Group (formerly Lafarge Holcim), one of the world’s largest suppliers of cement, concrete, and other construction-related services. It currently produces about 10 million metric tons of cement per year.
As of the end of the first quarter of 2023, HPI declared net income of P356.23 million, down about 15 percent from the P420.61 million it earned in the same period last year. Last year, HPI declared a net income of P943.3 million, down 63.22 percent from 2021’s P2.56 billion.
In 2019, one of the country’s biggest conglomerates, San Miguel Corp., attempted to buy a controlling stake in HPI through its First Stronghold Cement Industries Inc. (FSCII), a wholly owned subsidiary of San Miguel Equity Investments Inc., which in turn is wholly owned by SMC.
That acquisition did not materialize.
Under the PSE’s Amended Voluntary Delisting Rules, voluntary delisting must be approved by: at least two-thirds of the entire membership of the board of directors, including the majority, but not less than two, of all of its independent directors; and stockholders owning at least two-thirds (2/3) of the total outstanding and listed shares of the listed company. The number of votes cast against the delisting proposal should also not be more than 10 percent of the total outstanding and listed shares of the listed company.
HPI said it is diligently working to pursue the specific requirements set forth by the PSE for a voluntary delisting.
“Additionally, we are committed in ensuring compliance with all the necessary disclosures that must accompany such a pursuit,” HPI said.
