Hong Kong / HK. (fp) First Pacific Company Limited agreed to sell its 50 percent shareholding (including shareholder loans) in FPW Singapore Holdings Pte. Ltd. (FPW) to Wilmar International Limited, owner of the other half of the joint venture vehicle, for USD 300 million. FPW owns 100 percent of Goodman Fielder Pty Limited, a major Australasian food producer.
The transaction requires regulatory approvals which could require a completion period of up to nine months. The sale is expected to be completed in the fourth quarter of this year with First Pacific receiving USD 275 million upon completion, and a contingent receivable of USD 25 million payable in 2021 if a 2020 earnings target is met and an additional USD 25 million earn-out payment if a higher 2020 earnings threshold is reached.
Notwithstanding the substantial cash inflow from the sale, the disposal of its Goodman Fielder stake will result in First Pacific recording a non-cash, non-recurring loss of about USD 280 million.
«We are returning to our roots in emerging Asia,» said Manuel V. Pangilinan, Managing Director and Chief Executive Officer of First Pacific. «This investment was a foray outside our comfort zone and I am confident it will fare well in the hands of Wilmar.»
Proceeds from the sale of the FPW stake will be earmarked for debt reduction, beginning with a USD 252 million 6.375 percent bond maturing in September 2020. Redemption of this bond and other debt reduction initiatives will cut First Pacific’s gross debt and slash its interest expenses.
The sale of First Pacific’s 50 percent stake in the Goodman Fielder holding vehicle fulfils a management commitment to streamline the Company’s portfolio and using proceeds from such sales to finance debt reduction and share repurchases.
«We have historically been focused on our core sectors in our core geography and this has brought us steady and strong investment returns,» Pangilinan said. «This asset sale frees us to focus on our strongest investments, which are just now beginning to deliver their 2018 full-year earnings reports. If what we have seen in our group’s results announcements so far is any indication of what the future holds, our prospects are bright.»