Gaisano group-led retailer Metro Retail Stores Group Inc. (MRSGI) has carved P714.91 million out of its initial public offering (IPO) proceeds to build a new warehousing and logistics hub in Sta. Rosa City, Laguna province.
“At present, the demand for warehousing and logistics requirements in Luzon has been increasing and can no longer be accommodated by the existing leased property in Silangan, Canlubang, Laguna, which currently serves as the DC (distribution center) of the corporation for Luzon,” MRSGI said in a disclosure to the Philippine Stock Exchange on Monday.
Based on MRSGI’s prospectus in 2015 when it debuted on the Philippine Stock Exchange, P776 million of the proceeds would be earmarked for logistics and the establishment of a distribution center in Cebu, for disbursement from 2016 to 2017.
Out of the total amount, MRSGI has so far used P61.69 million, leaving a balance of P714.91 million.
Apart from a greater need for logistics facility in Luzon, MRSGI said there was no assurance that the existing leased property in Laguna—where the current facility stands—could be renewed under favorable terms in the long term.
MRSGI said it had a more viable alternative to construct its own distribution center in Sta. Rosa City, Laguna.
Furthermore, MRSGI said it could continue to serve the warehousing and logistics requirements in Cebu using the existing facilities.
Thus, MRSGI said it would be “beneficial and advantageous” for MRSGI to use the previously allocated amount to construct a distribution center in Barangay Pulong, Sta. Cruz, Sta. Rosa City, Laguna, instead of Cebu.
The target date to start construction of the new facility on Sta. Rosa City is second quarter of 2021.
Meanwhile, MRSGI also obtained approval from its board to embark on a stock buyback program to enhance shareholder value and establish an executive stock option plan. It has budgeted P300 million out of its existing cash supported by unrestricted retained earnings- without using IPO proceeds to fund the stock buyback.
The share buyback program will not involve any active and widespread solicitation from the stockholders and will be implemented in the open market through the trading facilities of the local stock exchange, the disclosure said. —DORIS DUMLAO-ABADILLA INQ