LBC vows to pay Singapore investor $39M debt

Manila, Philippines – Listed freight forwarder LBC Express Holdings, Inc. has vowed to pay its Singapore creditor $39 million (roughly P2.22 billion) in an unfinished deal where a default would mean the conversion of debt notes tied to a majority stake in the Araneta family-led company.

LBC told the stock exchange that CP Briks Pte. Ltd. (CP Briks), an investment holding company managed by Singapore-based private equity and special purpose vehicle firm Crescent Fund Management Pte Ltd., has given it a final notice. Crescent Fund runs fund operations in Southeast Asia, China and Australia, stock exchange filings show.

The listed Philippine freight forwarder owes CP Briks originally $50 million (roughly P2.85 billion) through a convertible debt instrument issued seven years ago in August 2017. The loan proceeds were meant to boost LBC’s war chest to fund its business growth, including capital expenditures and working capital.

That seven-year secured convertible instrument already fell due and the final notice that set the new settlement date for Sept. 15 this year is an extension of the terms.

“The Company will settle the outstanding principal amount and any accrued interest relating to such obligation on or before the Extended Stated Maturity Date,” LBC said in its disclosure on Monday, Aug. 18.

The catch: the debt notes are convertible into common shares of LBC at the option of CP Briks.

LBC stock exchange filings show that on Oct. 3, 2017 or two months after the issuance of the debt notes, LBC entered into a pledge supplement with CP Briks covering “all of the Parent Company’s shares in LBCE consisting of 1,041,180,504 common shares, representing 100% of the total issued and outstanding capital stock of LBCE.”

In the event of a default, the agreement allows CP Briks to foreclose “upon the pledge over LBCE shares as a result of which LBCE shares may be sold via auction to the highest bidder,” the disclosure read.

“The sale of LBCE shares in such a public auction shall extinguish the outstanding obligation, whether or not the proceeds of the foreclosure sale are equal to the amount of the outstanding obligation,” it added.