Thursday, June 26, 2008 [ manilatimes.net ]
By Likha Cuevas-Miel, Reporter
RFM Corp. will divest a substantial portion of its stake in Philippine Townships Inc. (Philtown) by declaring a property dividend to its shareholders, which would make the property unit a publicly held company, the company announced Wednesday.
During the annual meeting, RFM shareholders approved a property dividend of 143.65 million common shares of Philtown worth P501.89 million. The firm’s shareholders on record as of July 9, 2008, will receive one Philtown common share for every 22 shares of RFM, pending Securities and Exchange Commission and creditor approvals.
The divestment would reduce RFM’s 100-percent exposure in the real estate firm to 34.21 percent, while some 4,000 shareholders will now own Philtown. This will allow Philtown to qualify for listing by way of introduction in the Philippine Stock Exchange later this year, Felicisimo Nacino, RFM executive vice president and chief operating officer, told reporters.
The listing will enable Philtown to raise additional funds through a follow-on offering after a year or two since “this is not the time to raise money from the stock market,” Nacino said. RFM may further reduce its stake in its subsidiary through this follow-on offer but the parent firm and Philtown have yet to determine the amount of fresh capital to be raised, he added.
Philtown has several real estate projects under its portfolio under RFM Realty Marketing Corp.: Philtown Property Management, Inc., First Tanauan Realty Corp. and McKinley Tower Inc., First San Rafael Realty Corp., Philtown Utilities Corp., and One McKinley Place Inc. These subsidiaries are wholly owned by Philtown except for One McKinley Place Inc., which was co-owned with EIB Realty Develop-ment Inc. Philtown’s partner has divested its interests in One McKinley Place last year.
Besides the property dividend, RFM shareholders also approved the retirement of 767.31 million common treasury shares at par value P1 and a cash dividend of P50 million to shareholders as of record date July 9. Shareholders will receive P0.015 centavos per share.
For the next five years, RFM aims to double its size to P14 billion or an annualized revenue growth of 15 percent. Last year, the company’s consolidated sales for the whole RFM group, including Philtown, reached P6.99 billion, or 13.8 percent higher than the previous year.
It also plans to capture the top spot in its major product categories like ice cream, flour—specifically pasta—and beverage and meat. At present, RFM’s Selecta ice cream is the market leader while Fiesta spaghetti is next to Royal in terms of market share at 26 percent while the former has captured 33 percent of the market, Nacino said.
Within five years, the company also aims to reach a net income of P700 million from recurring sources. Its profits during the first quarter grew 7.6 percent to P67.3 million while its 2007 full year profits reached P234.4 million, or 15.7 percent more than the previous year.
Also in the pipeline is RFM’s plan to have a return on equity of at least 12 percent and achieve a share price of 14 times price to equity (P/E) ratio.
Nacino said the company will not implement any price hikes until the end of this year to keep its products still affordable to the public. He said RFM would just implement cost cutting measures through the improvement of its production lines and do the manufacturing themselves rather than use third party contract manufacturers. The company may also use raw material substitutes, which it has been doing since the beginning of this year, to keep costs down.
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