AEV Sells 77.24% of ATS at 26% Premium

Aboitiz Equity Venture (AEV) accepts the offer of Negros Navigation Company (Nonaco) to purchase its transport subsidiary Aboitiz Transport System (ATS) at a premium of 26.43%. 

On 06 December 2010 (Tuesday), AEV announces the deal that sells its 1,880,489,607 common shares, representing 77.24%, in ATS to Nenaco at a price of USD105 million, equivalent to PHP4.5 billion at PHP43.75 exchange rate. The purchase price will be paid at the closing date of 10 January 2011. The rest of the ATS equity is owned by Jebsen Group of Norway.

In case ATS fails to get the nod of its creditors, Aboitiz & Co. assures a credit line to pay off creditors, which will be payable in 12 months.

Before the sell closes, AEV will acquire 63.5% equity stake of the Aboitiz Jebsen group for approximately PHP355.91 million to control the management, manning and crew management, and bulk transport businesses of ATS. Meanwhile, Aboitiz & Co. will buy 50% stake of Aboitiz Jebsen group in the chartering business for PHP44 million.

AMP Dacutan of Business World reported that  ATS "contributed a net loss of P374 million to Aboitiz Equity Ventures’ bottom line during the January to September period, a reversal from last year’s P331-million profit." Aboitiz Transport System has 2,064 employees and 18 ships operating under the Supercat, Super Ferry, Cebu Ferry and 2GO brands. It is the country’s biggest freight and sea passage provider firm with market shares of 35% and 34%, respectively.

Associated Free Press reported that Nenaco will end up acquiring 93.2% stake of ATS. Meanwhile, the Chinese-ASEAN Marine BV, a private equity fund that the Chinese government controlled through the Chinese-ASEAN Investment Cooperation Fund, will acquire a majority state on Nenaco through a capital infusion that will help pay for the ATS stake.

With the sale, AEV effectively divests a long-losing subsidiary.