ANGLO Philippine Holdings Corp. (APO) said Monday that it had entered into an agreement to assign its subscription rights and obligations covering a 20.43-percent stake in Atlas Consolidated Mining and Development Corp. to Dominion Holdings Inc.
“The proceeds will be used to retire a portion of the corporation’s liabilities,” APO said in a disclosure.
The agreement, approved by APO’s board, covers 727.2 million subscribed and partially paid common shares of Atlas.
APO said the transaction would help strengthen its financial position as it would also substantially reduce its subscription liabilities.
Under the transaction, Dominion will assume APO’s rights, interests and obligations over the shares, including remaining subscription payments due to Atlas upon call by its board.
APO said it had already paid 25 percent of the subscription price while the remaining 75 percent remained payable upon call by Atlas.
The transaction is expected to improve APO’s current ratio, debt-to-equity ratio and return on assets at both the parent and consolidated levels.
At the parent-company level, APO expects to recognize a gain on the assignment, which would increase retained earnings before tax.
At the consolidated level, however, retained earnings are expected to decline because of the reversal of the group’s previously recognized share in Atlas’ net income and other comprehensive income from prior years.
Despite the reversal, APO said consolidated retained earnings were expected to remain positive after the transaction.
The company said the estimated financial effects were based on the current terms of the transaction and remained subject to the final accounting treatment under applicable Philippine standards.
APO’s share price slipped 40 centavos to close at P1.40 each on Monday.
