LBC Express Holdings, Inc
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PRELIMINARY PROSPECTUS STRICTLY CONFIDENTIAL ell or the ell or the LBC Express Holdings, Inc. ffer ffer Shares may not be sold nor may an offer to (incorporated in the Republic of the Philippines) Primary Offer of up to 10,000,000 Common Shares and Secondary Offer of up to 59,101,000 Common Shares in jurisdiction any Offer Price of up to ₱17.00 per Offer Share to be listed and traded on the Main Board of The Philippine Stock Exchange, Inc. Sole Underwriter The date of this Prospectus is 8 March 2017 iminary iminary Prospectus is issued in final form. noUnder shall circumstances this Preliminary Prospectus constitute an offer to s THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE AND SHOULD BE REPORTED IMMEDIATELY TO THE PHILIPPINES SECURITIES AND EXCHANGE COMMISSION. This Preliminary Prospectus and the information contained herein are subject to completion or amendment without notice. The O buy be prior accepted to the thattime the Prel Shares Offer theor of solicitation sale be offer, Shares norany Offer offer there buy to solicitationan any shall of LBC Express Holdings, Inc. LBC Hangar, General Aviation Center, Domestic Airport Road Pasay City, Metro Manila, Philippines Telephone Number: +632-856-8510 Fax Number: +632-851-9759 Corporate Website: www.lbcexpressholdings.com This Prospectus relates to the offer and sale of up to 69,101,000 common shares at an Offer Price (as defined below) of up to ₱17.00 (the “Offer Shares”), with a par value of ₱1.00 per share (the “Common Shares”), of LBC Express Holdings, Inc., a corporation organized under Philippine law (the “Issuer” or the “Company”). The Offer Shares will comprise of 10,000,000 new Common Shares to be issued and offered by the Company by way of a primary offer (the “Primary Offer Shares”), and of 59,101,000 existing Common Shares offered by LBC Development Corporation (the “Selling Shareholder’) pursuant to a secondary offer (the “Secondary Offer Shares”). The trading symbol of the Company is “LBC.” The offer of the Offer Shares is referred to as the “Offer.” See “Plan of Distribution” on page 189 and “Use of Proceeds” on page 56 of this Prospectus. Pursuant to its articles of incorporation as amended on October 12, 2015, the Company has an authorized amount of capital stock of ₱2,000,000,000.00 divided into 2,000,000,000 Common Shares with a par value of ₱1.00 per share, of which 1,425,865,471 Common Shares are issued and outstanding as of the date of this Prospectus. The Offer Shares shall be Common Shares of the Company. The Offer Shares shall be offered at a price of up to ₱17.00 per Offer Share (the “Offer Price”). The determination of the Offer Price is further discussed on page 60 of this Prospectus. A total of up to 1,435,865,471 Common Shares will be outstanding after the Offer. Assuming the maximum offer price of ₱17.00, the total proceeds to be raised by the Company from the sale of the Primary Offer Shares will be ₱170.0 million. Assuming the maximum offer price of ₱17.00, the estimated net proceeds to be raised by the Company from the sale of the Primary Offer Shares (after deducting fees and expenses payable by the Company of approximately ₱40.5 million) will be approximately ₱129.5 million. Assuming the maximum offer price of ₱17.00, the total proceeds to be raised by the Selling Shareholder from the sale of the Secondary Offer Shares will be ₱1.004 billion. Assuming the maximum offer price of ₱17.00, the estimated net proceeds to be raised by the Selling Shareholder from the sale of the Secondary Offer Shares (after deducting fees and expenses payable by the Company of approximately ₱24.4 million) will be approximately ₱979.6 million. The Company intends to use the proceeds it receives from the Offer to finance strategic acquisitions and organic expansion, as well as for general corporate purposes. The Selling Shareholder intends to use the proceeds it receives from the Offer for general corporate purposes. For a more detailed discussion on the proceeds from the Offer and the Selling Shareholder’s proposed use of proceeds, please see “Use of Proceeds” beginning on page 56 of this Prospectus. The Sole Underwriter (as defined below) will receive a transaction fee from the Company equivalent to 2.5% of the gross proceeds from the sale of the Offer Shares (as defined below). These are inclusive of the amounts to be paid to other participating underwriters and selling agents, where applicable. Any Offer Shares left unsubscribed after the Offer Period will be underwritten, on a firm commitment basis, by the Sole Underwriter. For a more detailed discussion on the fees to be received by the Sole Underwriter, see “Plan of Distribution” beginning on page 189 of this Prospectus. Each holder of the Shares will be entitled to such dividends as may be declared by our Board of Directors, provided that any stock dividend declaration requires the approval of shareholders holding at least two- i thirds of our total outstanding capital stock, which refers to the total shares of stock subscribed by, under binding subscription agreement with, subscribers or stockholders, whether paid in full or not, except treasury shares. The Company has adopted a dividend policy to distribute to its shareholders a portion of its funds that are surplus subject to the operating and expansion needs of the Company, as determined by the Board of Directors of the Company, in the form of stock and/or cash dividends, subject always to: (a) all requirements of the Corporation Code of the Philippines as well as all other applicable laws, rules, regulations and/or orders; (b) any banking or other funding covenants by which the Company is bound from time to time; and (c) the operating and expansion requirements of the Company as mentioned above. See “Dividends and Dividend Policy” on page 58 of this Prospectus. Up to 1,820,200 of the Offer Shares (or 20.0% of the Offer Shares) (the “Trading Participants Shares”) are being offered and sold by the Sole Underwriter at the Offer Price in the Philippines to all of the trading participants of the PSE (the “PSE Trading Participants” or “Selling Agents”). Details regarding the commission to be received by the Sole Underwriter can be found under “Plan of Distribution.” Prior to the closing of the Offer, any allocation of Offer Shares not taken up by the PSE Trading Participants shall be distributed by the Sole Underwriter to its clients or to the general public. Offer Shares not taken up by the PSE Trading Participants and the Sole Underwriter’s clients or the general public shall be purchased by the Sole Underwriter. See “Plan of Distribution” on Page 189 of this Prospectus. Up to 55,280,800 of the Offer Shares (or 80.0% of the Offer Shares) (the “Institutional Offer Shares”) are being offered and sold by the Sole Underwriter to certain qualified buyers in the Philippines (the “Institutional Offer”). Any Institutional Offer Shares allocated to certain qualified buyers within the Philippines may be re-allocated to the PSE Trading Participants for distribution by the Sole Underwriter, based on mutual agreement between the Sole Underwriter and the Company. All of the Common Shares issued and to be issued pursuant to the Offer have identical rights and privileges. The Common Shares may be owned by any person or entity regardless of citizenship or nationality, subject to the nationality limits under Philippine law. The Philippine Constitution and related statutes set forth restrictions on foreign ownership for companies engaged in certain activities. Because the Company, through its subsidiary LBC Express, Inc., is engaged in air freight forwarding and private express and messengerial delivery services, its foreign shareholdings may not exceed 40% of its issued and outstanding capital stock entitled to vote in the election of directors, and 40% of its total issued and outstanding capital stock, whether or not entitled to vote in the election of directors. See “Philippine Foreign Exchange and Foreign Ownership Controls” on page 187 of this Prospectus. Before making an investment decision, investors should carefully consider the risks associated with an investment in the Common Shares. These risks include: risks relating to the Company’s business; risks relating to the Philippines; risks relating to the Offer and the Offer Shares; and risks relating to certain statistical information in this Prospectus. Please refer to the section entitled “Risk Factors” beginning on page 31 of this Prospectus, which, while not intended to be an exhaustive enumeration of all risks, must be considered in connection with a purchase of the Offer Shares. ii An application for listing of the Common Shares was approved on [●] by the board of directors of the PSE, subject to the fulfillment of certain listing conditions. The PSE assumes no responsibility for the correctness of any statements made or opinions expressed in this Prospectus. The PSE makes no representation as to its completeness and expressly disclaims any liability whatsoever for any loss arising from reliance on the entire or any part of this Prospectus. Moreover, the Securities and Exchange Commission (the “SEC”) has issued its pre-effective clearance and permit to sell securities on [●] and [●], respectively. Such approvals are permissive only and does not constitute a recommendation or endorsement of the Offer Shares by the PSE or the SEC. An application has been made to the SEC to register the Offer Shares under the provisions of the Securities Regulation Code of the Philippines or Republic Act No.