The board of sugar firm Roxas and Co. Inc. (RCI) has agreed to enter into an P800-million call and put option agreement with LDA Capital Ltd. as part of the company’s fund-raising activities.
The company said it will sign the call and put option agreement on Wednesday.
An options contract grants the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a certain date. A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock.
“This equity placement commitment is part of RCI’s fund-raising activities aimed at strengthening its subsidiaries, with the proceeds to be utilized for additional working capital and to support the reduction of bank debts to manageable levels,” the company said.
LDA Capital is the investor and LDA Capital LCC will act as the deal’s arranger.
Under the agreement, RCI has the right, but not the obligation, to sell treasury shares to the LDA by issuing a put option notice, in which the company will control the timing and maximum amount of the put option.
The term of the put option is 36 months from signing of the agreement. All transactions with the said agreement will be subject to required regulatory and board of directors’ approvals, it said.
Roxas board also approved the grant of a call option to the investor, which shall allow LDA to purchase up to 99 million common shares of the corporation at an exercise price of P2.38 per share, exercisable any time during the term of the agreement. Shares of the company closed on Tuesday at P1.90 apiece.
LDA Capital is a global alternative investment group with expertise in complex, cross border transactions worldwide. The firm provides capital solutions to companies seeking financing in underserved markets and in complex conditions on a global basis.
Image credits: www.roxasholdings.com.ph