Vulcan Industrial & Mining [VUL] suspended after announcing backdoor listing


July 5, 2021

Following the Vulcan Industrial & Mining [VUL 2.27 susp] board’s approval of a slate of changes to VUL that included a backdoor listing of the “HGP Group”, which is loosely defined as Hilario G. Pagauitan and his wife, Sofia G. Paguitan, the PSE suspended trading in VUL’s stock before trading on Friday.

The stock will remain suspended until VUL’s board is able to provide comprehensive disclosure on the proposed transaction. What we know based on VUL’s the disclosure is this: (1) the board approved the HPG Group’s subscription to 5,180,000,000 common shares of VUL in exchange for cash and a transfer of ownership of HPG Group’s interest in East Coast Mineral Resources Company Incorporated (ECMRC); (2) and it also approved an increase in VUL’s authorized capital stock from P4 billion to P12 billion to accommodate this transaction.

The annual shareholders’ meeting was delayed (presumably while the board worked out the details of this deal), but will now go ahead on September 7 where these matters will be put to a vote. We have to wait for more information on what the business will do going forward (that’s part of comprehensive disclosure), but it appears as though VUL has reversed its intentions to exit the mining business with this transaction.


VUL only has 1.45 billion outstanding shares as of this writing, so HPG Group’s subscription to 5.18 billion shares would make its post-transaction stake in VUL around 78%. This is another one of those “property-for-shares” swaps, just like the Marvin Dela Cruz Group’s acquisition of Premier Horizon Alliance [PHA 1.65 0.60%] using a blend of cash and Dela Cruz’s interest in SquidPay as payment.

The way it works is that the listed company (backdoor target) increases its authorized capital to allow it to issue a substantial amount of new shares (usually enough to become the majority shareholder), then the group representing the unlisted company offers to buy those shares in the listed company using cash and their shares in the unlisted company to pay for the shares in the listed company. The result is that the group representing the unlisted company becomes the owner of the listed company, and the listed company becomes the owner of the unlisted company.


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