Market Event

The P2.8 Billion investment of MAP 2000 Dev’t Corp. (M2DC) in Basic Energy Corp. (BSC) is targeted to be completed in the second quarter. This will be used on expanding its portfolio, including interests in other renewables such as solar, wind, biomass, etc.

Opinion

Subscription price of M2DC for 67% of BSC is at 0.285/share which will trigger a tender offer for minority shareholders. Note that with the 9.8 Billion share issuance, investors will be diluted by about 19%. Plans post-acquisition have yet to be detailed but the acquirer, M2DC, owns 55% of Filoil Energy.

Filoil has market share of about 0.5% in the Philippine fuel market. As for BSC, it only has minority interests in geothermal projects and has recognized net losses over the past three years.

Thus, the stock will be ripe with speculation on whether this will be a backdoor play for Fil-oil. Trade with caution

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