Federal Resources acquires LBC Express

MANILA, Philippines – Federal Resources Investment Group Incorporated has acquired LBC Express Incorporated.

The acquisition paves the way for the backdoor listing of the Araneta-owned courier and freight forwarding services firm.

Federal Resources, which was recently acquired by LBC Development Corporation, said its board approved the acquisition of 1.04 billion issued and outstanding shares of stock of LBC Express worth not less than P1 billion ($21.92 million).

In a disclosure to the stock exchange Thursday, July 30, Federal Resources said its board approved the change in the company’s corporate name to LBC Express Holdings Incorporated.

Fund raising activity

Federal Resources said to fund the acquisition of LBC Express and possible fund raising activity, it will increase its authorized capital stock to P3 billion ($65.79 million) common shares, divided into 3 billion common shares with a par value of P1 ($0.022) per share from current P100 million ($2.19 million) authorized capital stock.

LBC Development will subscribe to up to 25% of the common shares out of the P3 billion ($65.79 million) increase in capitals stock.

“The company needs to raise additional capital in preparation for the purchase of up to 1,041,180,493 issued and outstanding shares of stock of LBC Express, Inc,” Federal Resources said.

The company’s board of directors approved the issuance of shares out of the unissued capital stock following the increase in the authorized capital stock of the corporation to new investors and/or existing stockholders. The move is to fund the corporation's acquisition of the assets and other investments, as well as the listing of such shares with the Philippine Stock Exchange.

The Federal Resources board also approved the issuance of shares in one or more tranches, whether out of the increase in authorized capital stock or out of the unissued capital stock of the corporation to LBC Development at P1 ($0.022) per share.

LBC Express filed with the Securities and Exchange Commission an application to conduct an initial public offering (IPO) and hired UBS to be the sole international bookrunner and underwriter for the IPO in February 2014.

Proceeds would have been used to finance strategic acquisitions, organic expansion, information technology system upgrades, refleeting of delivery vehicles, as well as for other corporate purposes.

In the middle of the process, LBC Express withdrew its IPO application saying “other fund raising opportunities have presented themselves and that it has decided to explore the same."

LBC Express, then known as Luzon Brokerage Corporation, was founded in the 1950's as a brokerage and air cargo event. The company initially operated as an air cargo forwarding service provider and was first to introduce 24-hour air cargo delivery service.

To date, the company offers the widest coverage and network with over 700 branches nationwide. LBC, with over 60 years of operating history, has become a household name in courier and freight forwarding services. It also provides non-bank, domestic remittances services and inbound international remittances in the Philippines.

It has two operating segments, logistics (the company's primary revenue driver) and money transfer services.

The company also expanded overseas with the first LBC Express branch in San Francisco, California in 1985. LBC Express currently has over 60 branches in the US and Canada.

LBC Express is an affiliate of LBC Development Bank, a thrift bank that closed down in 2011.

The Philippine central bank earlier blamed the failure of LBC Express to pay the cash advances made by LBC Bank to its eventual downfall, which is now under receivership by the Philippine Deposit Insurance Corporation. Rappler.com