Republic Cement to issue P1.35-B convertible notes

Republic Cement to issue P1.35-B convertible notes
06 September 2004

Republic Cement Corp. yesterday said it will issue P1.35 billion in convertible loan notes to Lafarge Cement Philippines, Inc. in exchange for its stake in Continental Operating Corp.  In a disclosure to the stock exchange, Republic Cement’s Assistant Corporate Secretary Angela D. Edralin said the notes will bear an interest rate of 8% per annum. The notes may, at the option of the holder, be converted into 1.35 billion common shares of Republic Cement any time after five years from the purchase of the shares.

Ms Edralin said Republic Cement’s board of directors had approved the plan to acquire Continental, a wholly owned subsidiary, in anticipation of economic recovery and demand growth in cement.  Six cement companies are under Republic Cement, namely, Fortune Cement Corp., Premier Cement, Iligan Cement Corp., Mindanao Portland Cement, FR Cement Corp. and Lloyds Richfield Industrial Corp.

The cement manufacturing plants of Continental are located in Barrio Bigte, Norzagaray, Bulacan and in Tanay, Rizal.  Following the acquisition, the group’s combined cement operation will be the largest in the country, with a total rated capacity of over 8.5 metric tons of clinker per year.

The company said it looks forward to "significant benefits and synergies" from its plan to acquire Continental based on the results of detailed studies it had commissioned.

Republic Cement said the group will benefit from streamlined and simplified management and operations in terms of procurement, sales, marketing and distribution; consolidation of well-established brands; and the expertise in the production and marketing of different products.  The company also expects to strengthen nationwide coverage and gain technical leverage for improved operations and sharing of people, equipment and spares. It is also eyeing an enhanced credit rating as a result of a larger market share and asset base.

Published under Cement News