Alterra Capital Partners, Inc.ALT

Resolutions of the Board of Directors and Shareholders of ALT approving the acquisition by ALT of Philab Industries Inc. (“Philab Industries”) which, if or when implemented as described below and taken together with other related actions, will result in the backdoor listing of Philab Industries.

Under a Sale and Purchase Agreement dated 12 August 2016 (the “Sale and Purchase Agreement”) executed by and among Conrado Rafael C. Alcantara, Alfonso S. Anggala and Star Alliance Securities Corp. (hereinafter, collectively referred to as the “Selling Shareholders”), on one hand, and Genomics, Inc. and Hector Thomas A. Navasero (hereinafter collectively referred to as the “Buyers”), on the other, the Selling Shareholders agreed to sell, assign, transfer and convey to the Buyers, and the Buyers agreed to purchase, acquire and accept from the Selling Shareholders, all of the rights, title and interests of the Selling Shareholders in and to Two Hundred Eight Million Six Hundred Twenty Four and Eight Hundred and One (208,624,801) common shares of ALT (or the "Company"), representing approximately 67% of the outstanding capital stock of the Company (the “ALT Shares”). This agreement to sell and purchase the ALT Shares was made subject to the completion of certain conditions precedent, including the completion of a mandatory tender offer for all of the remaining shares of ALT. The price at which the Selling Shareholders agreed to sell, and the Buyers agreed to purchase, the ALT Shares is the aggregate amount of Three Hundred Sixty Two Million Three Hundred Twenty Four Thousand Nine Hundred Sixty One and 21/100 Pesos (¿362,324,961.21) or One and 74/100 Pesos (¿1.74) per share.

On 11 October 2016, following the completion of the mandatory tender offer by the Buyers to all shareholders of ALT, a total of 208,635,801 common shares of ALT (inclusive of the common shares of ALT that were tendered) were acquired by Hector Thomas A. Navasero ("HT Navasero") and Genomics, Inc. As a result of the said acquisition, the Buyers acquired approximately 67% of the outstanding capital stock of ALT.

In consonance with such change in control, during the meetings of the Board of Directors of ALT 14 September 2016, as well as the Annual Stockholder’s Meeting of ALT on 20 October 2016, the Board of Directors and ALT stockholders representing at least 2/3 of the outstanding capital stock approved the resolutions specified below. These resolutions, taken together, are geared towards ALT acquiring approximately 100% of the outstanding shares of stock of Philab Industries which, if and when fully implemented, will result in the backdoor listing of Philab Industries.

Specifically, the following resolutions were passed and approved by both the Board of Directors and the stockholders of ALT:

1. The change in the name of ALT to “Philab Holdings Corp.”;
2. The amendment of the secondary purposes of ALT to include the power to guarantee;
3. The change of the principal office of ALT to the 8th Floor, 1128 38th Avenue, Fort Bonifacio Global City, Taguig City, Metro Manila (said location being an office of Philab Industries);
4. The denial of pre-emptive rights of stockholders of ALT;
5. The change of par value to Php0.25 per share without any resulting increase in the authorized capital stock of ALT and the resulting decrease in the number of issued and outstanding shares of ALT;
6. The increase in the authorized capital stock of ALT to up to Php 2 billion;
7. The delegation of authority to amend/repeal the Amended By-Laws or adopt new By-Laws to the Board of Directors;
8. The acquisition by ALT of up to 361,390 shares of stock of Philab Industries representing approximately 100% of its issued and outstanding capital stock at the price of approximately Php500,000,000.00, as well as all of the rights and interests of the current stockholders of Philab Industries (“Sale Shares”); and
9. The issuance of shares of ALT to existing shareholders or new investors, either out of its unissued capital or increase in capital stock.

Please see attached.

The purpose of the Transaction is to revive the business operations of, and give value to, ALT. As may be noted from its financial statements, ALT has no substantial assets. Through the Transaction, new businesses will be infused into the Company which will allow the Company to take initial steps towards providing its shareholders with better returns on their investment. On the other hand, Philab Industries shall also benefit from its acquisition by ALT as it will have the exposure to capital markets that could help in the business operations of Philab Industries. Following the infusion of the Sale Shares into ALT, ALT is expected to generate income out of Philab Industries' expanded business operations, increase its revenues as well as the market price of its shares.

The Sale Shares are intended to be acquired by and transferred to ALT at the value of approximately Five Hundred Million Pesos. This amount is indicative only and was arrived at following some discussions and negotiations among the parties, as well as an internal valuation exercise on the part of Philab Industries. To ensure the arms-length nature of the transaction, the final price for the Sale Shares must and shall be supported by a fairness opinion to be issued by a third-party financial adviser.

The aforesaid consideration for the Sale Shares is envisioned to be satisfied through the issuance of ALT shares, including, without limit, the Subscription Shares. As no definitive agreements have yet been executed, the manner by which payment for the Sale Shares is to be made, including any arrangements for payment on a deferred basis, have not yet been finalized. In any case, the parties are not discounting any such arrangements and may decide to adopt payment on a deferred basis for the Sale Shares to give ALT sufficient leeway to raise the final consideration for said shares.

The indicative issue value of the ALT shares is proposed to be at its par value. This issue value was considered a fair consideration and was arrived at taking into account the fact that ALT has no substantial assets. On the other hand, the indicative acquisition price of the Sale Shares is based on Philab Industries’ current assets (including booked receivables), expected revenue generation, cash flows and overall business prospects. In any event, ALT intends to secure a third party fairness opinion or report, in accordance with applicable regulations or listing requirements to support such indicative valuation and acquisition price.

ALT expects to broaden its investment portfolio through the acquisition of equity interest in Philab Industries.

Philab Industries is an industry leader in the healthcare and education sector innovating medical and educational tools and facilities with its over 58 years of operating history. Philab Industries also has an established customer base throughout the Philippines covering private and public sectors, laboratories and medical facilities.

Philab Industries is also the first to own and operate a genomic facility offering full genome sequencing and molecular diagnostics for medical cases. A pioneer in the Invitro Diagnostic with the world’s first SELF test for dengue and other communicable viruses.

Conscious of the strong growth potential in this industry, the Company foresees strong and sustained income results from its investment in Philab Industries. Philab Industries’ market leadership and expertise in its present and future laboratory, diagnostics and genome sequencing projects within and outside the Philippines will be the main factors for its sustained income growth. For the near future, the Company shall focus a large part of its investment in these core business activities of Philab Industries.

In sum, the business plan of the Company to invest in Philab Industries’ core businesses is expected to deliver the values needed to increase its own revenues as well as the market price of its shares thereby rewarding its shareholders with maximized earnings. The Company recognizes that a requisite and essential part of its role as owner is to raise funds from the capital market for the acquisition of Philab Industries' businesses in a bid to maintain its eminent status in its industry. These investments taken together are essential factors to assure continued shareholder profitability and returns.

ALT expects to broaden its investment portfolio through the acquisition of equity interest in Philab Industries.

Philab Industries is an industry leader in the healthcare and education sector innovating medical and educational tools and facilities with its over 58 years of operating history. Philab Industries also has an established customer base throughout the Philippines covering private and public sectors, laboratories and medical facilities.

Philab Industries is also the first to own and operate a genomic facility offering full genome sequencing and molecular diagnostics for medical cases. A pioneer in the Invitro Diagnostic with the world’s first SELF test for dengue and other communicable viruses.

Conscious of the strong growth potential in this industry, the Company foresees strong and sustained income results from its investment in Philab Industries. Philab Industries’ market leadership and expertise in its present and future laboratory, diagnostics and genome sequencing projects within and outside the Philippines will be the main factors for its sustained income growth. For the near future, the Company shall focus a large part of its investment in these core business activities of Philab Industries.

In sum, the business plan of the Company to invest in Philab Industries’ core businesses is expected to deliver the values needed to increase its own revenues as well as the market price of its shares thereby rewarding its shareholders with maximized earnings. The Company recognizes that a requisite and essential part of its role as owner is to raise funds from the capital market for the acquisition of Philab Industries' businesses in a bid to maintain its eminent status in its industry. These investments taken together are essential factors to assure continued shareholder profitability and returns.

Trading Company

Philab Industries is the first in the Philippines to own and operate a genomic facility offering full genome sequencing and molecular diagnostics for medical cases. It is also one of the country’s foremost providers of laboratory equipment and the oldest business institution servicing the fields of educational, medical and scientific research in the Philippines.

Philab Industries has further diversified by venturing into providing SELF invitro diagnostic products. Having become one of the leading dengue self-test kit providers in the region, the company plans to expand in increasing its range of self-diagnostic tests and build a modern manufacturing facility in the country and, recently, by transitioning to genomics. It also offers genetic screening and molecular diagnostics and genomic sequencing services for medical personal therapy. It plans to set up a genomics BPO in Clark to serve the ASEAN market.

Among the major projects of Philab Industries are as follows: (i) providing laboratory equipment and supplies that serve the needs of its many customers in the healthcare, medical and education industries such as government institutions, state universities, colleges, hospitals and research facilities; (ii) designing and building medical laboratories; (iii) developing invitro SELF tests for early diagnosis; and (iv) providing genome sequencing for personal therapy.

HT Navasero, Sylvia A. Navasero, Eduardo L. David and Jun Tsusaka are directors of both the Company and Philab Industries. All of them are likewise Philab Majority Shareholders who will be selling the Sale Shares respectively owned by them and, in turn, subscribing to the Subscription Shares.

Apart from the aforementioned directors, no other director of the Company has an interest in the transaction.

To safeguard the interest of the shareholders, an annual meeting of the stockholders was held on 20 October 2016 at which time the actions underlying the resolutions of Board of Directors of ALT covered herein were taken and discussed and where necessary, the approval/ratification of the shareholders of ALT, particularly the minority shareholders, were sought.

Further and in compliance with applicable requirements of the PSE, a follow-on offering may be conducted, subject to the terms and conditions to be determined and approved by the management and board of directors of ALT.

Amendment relates to the following subsequent events:
1) On 12 December 2016, the SEC approved the change in par value of ALT from PhP0.05 per share to PhP0.25 per share. The numbers indicated in the BEFORE and AFTER columns in this report already reflect such change in par; the numbers reflected in the AFTER column assumes that the Subscription Shares have already been issued out of the increase in the authorized capital stock of ALT. Currently, the application for the increase in the authorized capital stock of ALT is still in process with the SEC and has not yet been approved.
2) On December 19, 2016, ALT and the shareholders of Philab Industries, Inc. (Philab) other than two minority shareholders, entered into the sale of 93.43% of Philab in favour of ALT, at the aggregate price of PhP860 million. The difference in the initial approximate purchase price of PhP500million and the actual purchase price finally agreed upon of PhP860million was borne out of extensive negotiations among the parties and is supported by a fairness opinion secured by ALT. Copies of the Deeds of Sale covering the sale of the Philab shares are hereto attached. A copy of the fairness opinion shall be separately submitted.
3) On December 19, 2016, ALT also entered int Subscription Agreements with certain subscribers who subscribed to its increase in capital stock. Such subscribers include some of the selling shareholders of Philab, as well as non-related or affiliated subscribers to ensure continued compliance with the minimum public ownership requirement of the PSE (Epitrek Ventures, Ltd., Yamakazi Financials, Ltd and Ms. Rewa L. Santos). Copies of the Subscription Agreements are hereto attached. The increase in the capital stock of ALT is still currently in process with the SEC.