Metro Pacific Investments Corp. (MPIC) said it extended the due diligence on the planned acquisition of a 35-percent stake in Axelum Resources Corp. after the coconut exporter failed to its meet its financial projections.
MPIC chief finance officer June Cherly Cabal-Revilla said the extended due diligence would involve valuation as Axelum failed to achieve its targets and needed to re-forecast their numbers.
This means that MPIC could still acquire a stake in Axelum but at a lower acquisition price.
Both parties expected to complete the deal before the end of the year subject to the results of the extended due diligence.
“We did a due diligence on Axelum early last year and early this year. But through the unfolding of results in 2023, they have been very far from their numbers,” Cabal-Revilla said.
She said MPIC would meet with Axelum next week to look at their 2024 financial projections and “dig deeper into their assumptions.”
MPIC, through its agribusiness unit Metro Pacific Agro Ventures Inc. (MPAV), reported in February plans to acquire a 34.76-percent stake in Axelum for P5.32 billion as part of its move to venture into agriculture sector.
Under the sale and purchase agreement, MPAV will acquire 1.19 million common shares at P4.05 apiece, or P4.82 billion.
MPAV will also subscribe to 200 million redeemable voting preferred shares of Axelum at P2.50 apiece, or P500 million.
Axelum’s share price on Friday reached a 52-week low of P1.84, down from a 52-week high of P3.64 per share in February.
Cabal-Revilla said MPIC remained interested in Axelum, the country’s leading manufacturer and global exporter of high-quality coconut food products.
Axelum posted a net loss of P427.99 million in the first nine months of 2023, a sharp reversal from the P717.3-million net income in the same period last year.
Axelum recorded a net loss of P302 million for the third quarter, compared with a P296.4-million net income a year earlier. Axelum said it booked a one-time loss on inventory write-down amounting to P309.88 million, which reflects management’s current estimate of the unfavorable market price movement on finished goods inventory as of the reporting period.
“Our short-term focus is to finish the year on a high note, while setting ourselves up to be in the strongest position for a major turnaround in 2024. We are already seeing demand uptick in the United States, combined with other positive market indicators, which should further our momentum heading into the holiday peak season,” said Axelum president and chief operating officer Henry Raperoga.