C00771-2023

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATION CODE
AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported)
Jan 30, 2023
2. SEC Identification Number
A199701584
3. BIR Tax Identification No.
005-469-606
4. Exact name of issuer as specified in its charter
Philippine Business Bank, Inc., A Savings Bank
5. Province, country or other jurisdiction of incorporation
Caloocan
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
350 Rizal Avenue corner 8th Avenue Grace Park, Caloocan City Postal Code 1400
8. Issuer's telephone number, including area code
(02) 8363-3333
9. Former name or former address, if changed since last report
Not Applicable
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common 768,750,094
11. Indicate the item numbers reported herein
-

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

Philippine Business BankPBB

PSE Disclosure Form LR-1 - Comprehensive Corporate Disclosure on Issuance of Shares (Private Placements, Share Swaps, Property-for-Share Swaps
or Conversion of Liabilities/Debt into Equity) Reference: Rule on Additional Listing of Securities

Subject of the Disclosure

Comprehensive Corporate Disclosure on Philippine Business Bank’s issuance of shares by way of private placement.
Background/Description of the Disclosure

Pursuant to the approval of the Board of Directors and Stockholders to increase the capital stock of PBB on April 20, 2022 and July 27, 2022, the Bank on September 23, 2022 entered into subscription agreements with its principal shareholders for the subscription and issuance of 125,000,000 common shares of the Bank at the subscription price of Php 10.00 per share or total subscription price of Php 1,250,000,000.00. At the time of subscription, the principal shareholders paid 25% (or Php 937,500,000.00) of the subscription price of their respective subscriptions. On January 10, 2023, the principal shareholders fully paid for their respective subscriptions.

The subscription and issuance of 125,000,000 shares of PBB were duly recorded in the books of the Bank on January 20, 2023.

PBB had earlier announced its intention to raise Php 1,750,000,000 in additional capital for which the Bank would need to increase its authorized capital stock. To facilitate the necessary increase in ACS and in support of the Bank's fund raising efforts, the Principal Shareholders have subscribed to Php 1,250,000,000 equivalent to 25% of the Php 5,000,000,000 increase in capital via a private placement equivalent to 125,000,000 common shares at Php 10.00 per share in order to comply with the minimum required capital subscription for increase in capital.

In addition, PBB intends to conduct a Stock Rights Offering of up to 50,000,000 common shares at the offer price of Php 10.00 per share, or an aggregate of up to Php 500,000,000 to minority shareholders within the year.

Breakdown of additional common shares as follows:

Alfredo M. Yao – 55,803,072
Zest-O Corporation – 49,212,680
Armando M. Yao – 10,250,000
Mary Grace S. Yao – 4,962,500
Jeffrey S. Yao – 3,787,500
Erlinda M. Yao – 492,124
Leticia M. Yao – 492,124
Date of Approval by Board of Directors Apr 20, 2022
Comprehensive Corporate Disclosure
Description of the proposed transaction including the timetable for implementation, and related regulatory requirements

The Php 1,250,000,000.00 subscription of the Principal Shareholders forms part of PBB’s up to Php 1,750,000,000 capital raise consisting of: (a) the private placement fully paid on January 10, 2023; and (b) the up to Php 500,000,000 Rights Offer.

The BSP issued the Certificate of Authority dated November 28, 2022 which the Bank submitted to SEC in support of its application for amendment of articles of incorporation to increase its authorized capital stock. The application for increase in capital stock was approved by the SEC on January 19, 2023. The listing of the shares is conditioned on the approval by the PSE.
Rationale for the transaction including the benefits which are expected to be accrued to the listed issuer as a result of the transaction

The capital increase will enable the Bank to partially comply with the minimum capital requirement for a universal bank license and proceeds will be used for other general corporate purposes including, but not limited to, investments in government securities or corporate bonds, loan requirements, maintenance of capital expenditures, operating expenses, and other opportunities in the financial space. The additional capital will also support the Bank’s continuous compliance with capital adequacy requirements of the BSP and meet the growing demands of the banking business. A strong capital base will help the Bank sustain its business, prepare for future growth, maximize returns, and mitigate strategic risks.
The aggregate value of the consideration, explaining how this is to be satisfied, including the terms of any agreements for payment on a deferred basis

The principal shareholders initially paid Php 312,500,000.00 last September 21, 2022 and paid the remaining of balance of payment for the subscription equivalent to Php 937,500,000.00 was paid on January 10, 2023. This subscription via private placement totals to Php 1,250,000,000, equivalent to 125,000,000 common shares at Php 10.00 per share.
The basis upon which the consideration or the issue value was determined

The shares were issued at Bank’s par value of Php 10.00 per share.
Detailed work program of the application of proceeds, the corresponding timetable of disbursements and status of each project included in the work program. For debt retirement application, state which projects were financed by debt being retired, the project cost, amount of project financed by debt and financing sources for the remaining cost of the project

The proceeds from the Private Placement and the net proceeds from the Offer will increase the Bank’s capitalization which will greatly expand the Bank’s capability to develop more businesses and harness opportunities in the financial services space. The increase will also enable PBB to meet the growing demands of the banking business and positions the Bank to exploit opportunities as the economy rebounds.

In the event that the net proceeds from the Offer are less than the expected amount, the Bank intends to allocate the proceeds in order of priority as follows:

1. Investments allowed under BSP Regulations
2. Loan requirements

The Bank expects to fully utilize the proceeds from the Private Placement within 1Q 2023 to 4Q 2023.
Identity and/or corporate background of the beneficial owners of the shares subscribed, including the following
Beneficial Owners/Subscribers Nature of Business Nature of any material relationship with the Issuer and the parties to the transaction, their directors/officers or any of their affiliates
Alfredo M. Yao Mr. Alfredo M. Yao is the Chairman Emeritus of PBB. He is concurrently the President of Zest-O Corporation, Semexco Marketing Corp., Macay Holdings Inc., and Asiawide Refreshments Corp. He is the President of Solmac Marketing Inc., Harman Foods (Phil.) Inc., and Amchem Marketing, Inc. Mr. Yao has participated in the following seminars: Corporate Governance; AML and Risk Management, all conducted by the Pacific Management Forum and PBB; CISA for the Credit Bureau; SME Related Issues; and other CTB Related seminars. He has also attended several Philippine Chambers of Commerce & Industry (PCCI) Business Fora given by PCCI, the International Trade Organization, and the Department of Trade and Industry. Chairman Emeritus of PBB and President of Zest-O Corporation
Zest-O Corporation Zest-O is manufacturer of juices and food processor and was registered to the SEC on November 23, 1992. Part of the Yao Group of Companies. Mr. Alfredo M. Yao is the founder and President of Zest-O Corporation.
Armando M. Yao Armando M. Yao is President at Mega Asia Bottling Corp. Mr. Yao is also on the board of 13 other companies. He received an undergraduate degree from Mapua Institute of Technology. Majority/controlling owner of PBB and President of Mega Asia Bottling Corp
Jeffrey S. Yao Mr. Jeffrey S. Yao was appointed as the Chairman of the Board in November 2019. He is currently the Chief Executive Officer of Zest-O Corporation, Vice President of Macay Holdings Inc., Corporate Secretary of Mega Asia Bottling Corp, and the President of Bev-Pack Inc. He is also a Director at Zemar Development Inc., Onnea Holdings Inc., Mazy’s Capital Inc., ARC Refreshments Corp., AMY Holdings Inc., Semexco Marketing Corp., Asiawide Refreshments Corp., and ARC Holdings Inc. Mr. Yao started his career in the food and beverage industry when he was appointed as Plant Manager at Harman Food Philippines from 1990 to 1995. He has attended the following training programs: Basics of Trust at the Trust Institute of the Philippines in 2002; Corporate Governance & Risk Management for Bank Chairman of PBB and CEO of Zest-O Corporation
Erlinda M. Yao Ms. Erlinda M. Yao is the sister of Ambassador Alfredo M. Yao and is a stockholder of Zest-O Corporation. Majority/controlling owner of PBB and stockholder of Zest-O Corporation
Leticia M. Yao A well-respected figure in the healthcare industry, Dra. Yao was appointed as President of the United Doctors Medical Center (UDMC). She is currently a Director at Mega Asia Bottling Corporation, Zest-O Corporation, Uni-Ipel Industries Inc., Harman Foods Phils Inc., and Solmac Marketing Inc. She participated in training sessions for Corporate Governance & Risk Management for Banks’ Board of Directors by Development Finance Institute in 2002 and further taken the Risk Awareness Seminar by Pacific Management Forum in 2009. In 2014, she attended the AMLA Seminar by the Bangko Sentral ng Pilipinas and Corporate Governance Seminar by the Ateneo de Manila University. She also attended the Distinguished Corporate Governance Speaker Series and Corporate Governance Seminar for Directors and Senior Officers by ROAM Inc. in 2015; AMLA Seminar by BSP and PBB in 2016; Corporate Governance: Fraud Awareness by Center for Training and Development Inc. in 2016; IFRS 9 by Punongbayan and Araullo in 2017; Data Privacy Act Seminar in 2017; and Guide to Compliance with the Anti-Money Laundering Law and its IRR by Center for Global Best Practices and Corporate Governance Seminary by ROAM Inc. in 2018. Dra. Yao graduated from the University of Sto. Tomas with a Bachelor of Science degree in Medical Technology then pursued her post graduate degree in Medicine in the same university. Member of the Board of Directors of PBB and stockholder of Zest-O Corporation
Mary Grace S. Yao Mary Grace S. Yao is on the board of Macay Holdings, Inc. Ms. Yao received his Bachelor of Science in Food Technology degree from the University of the Philippines. Majority/controlling owner of PBB, member of the Board of Directors of Macay Holdings, Inc., and stockholder of Zest-O Corporation
Organizational/Ownership Structure of Subscribers
Controlling Shareholders of Subscribers Number of Shares Held %
Alfredo M. Yao 800,000 40 Linda S. Yao
300,000 15 Armando M. Yao 200,000
10 Erlinda M. Yao 200,000 10
Leticia M. Yao 200,000 10 Jeffrey S. Yao
100,000 5 Carolyn S. Yao 100,000
5 Mary Grace S. Yao 100,000 5
For subscribers with no track record or with no operating history: the Subscriber must present a statement of active business pursuits and objectives which details the step undertaken and proposed to be undertaken by the Issuer in order to advance its business. Projected financial statements shall only be required should there be references made in the Statement to forecasts or targets

N/A
The interest which directors of the parties to the transaction have in the proposed transaction

Mr. Alfredo M. Yao is the Chairman Emeritus of PBB.
Alfredo M. Yao and Director Leticia M. Yao are siblings.
His son, Jeffrey S. Yao, is PBB’s Chairman of the Board.

Mr. Alfredo M. Yao is the founder and President of Zest-O Corporation.
Mr. Jeffrey S. Yao is the CEO of Zest-O Corporation.
Mr. Armando M. Yao, Ms. Erlinda M. Yao, Ms. Leticia M. Yao, and Ms. Mary Grace S. Yao are all shareholders of Zest-O Corporation.
Statement as to the steps to be taken, if any, to safeguard the interests of any independent shareholders

The Bank has five (5) independent directors, out of the total eleven board seats, to safeguard the interests of the independent shareholders.

None of the independent directors have participated in the Private Placement.
Any conditions precedent to closing of the transaction

None except for regulatory approvals. The Bank submitted an application for increase in its authorized capital stock with the Company Registration and Monitoring Department of the Securities and Exchange Commission of the Philippines and the Bangko Sentral ng Pilipinas. The BSP issued the Certificate of Authority dated November 28, 2022 which the Bank submitted to SEC in support of its application for amendment of articles of incorporation to increase its authorized capital stock. The application for increase in capital stock was approved by the SEC on January 19, 2023.
Change(s) in the composition of the Board of Directors and Management

There is no change in the composition of the Board of Directors and Management.

Effects on the following

Ownership structure
Principal Shareholders Before After
Number of shares % Number of shares %
Alfredo M. Yao 239,838,309 37.26 295,641,381 38.46
Zest-O Corporation 162,052,923 25.17 211,265,603 27.48
Armando M. Yao 1,620,537 0.25 11,870,537 1.54
Erlinda M. Yao 1,620,536 0.25 2,112,660 0.27
Jeffrey S. Yao 1,620,536 0.25 5,408,036 0.7
Leticia M. Yao 1,620,536 0.25 2,112,660 0.27
Carolyn S. Yao 1,620,535 0.25 1,620,535 0.21
Mary Grace S. Yao 1,620,535 0.25 6,583,035 0.86

Capital structure

Issued Shares
Type of Security /Stock Symbol Before After
Common Shares / PBB 643,750,094 768,750,094
Preferred Shares / unlisted 62,000,000 62,000,000
Outstanding Shares
Type of Security /Stock Symbol Before After
Common Shares / PBB 643,750,094 768,750,094
Preferred Shares / unlisted 62,000,000 62,000,000
Treasury Shares
Type of Security /Stock Symbol Before After
N/A N/A N/A
Listed Shares
Type of Security /Stock Symbol Before After
Common Shares / PBB 643,750,094 643,750,094
Effect(s) on the public float, if any Due to the Private Placement of the Principal Shareholders, the public float decreased from 35.55% to 29.77%. However, subject to regulatory approval, the Bank shall conduct the stock rights offering for the minority shareholders.
Effect(s) on foreign ownership level, if any There will also be temporary dilution in foreign ownership from 1.48% to 1.24% after the Private Placement.
Other Relevant Information

The 125,000,000 common shares subscribed by the principal shareholders are subject of pending listing application with the PSE and are yet to be listed with the PSE. The 125,000,000 common shares exclude the up to 50,000,000 million common shares to be offered via stock rights offer.
Filed on behalf by:
Name John David Sison
Designation Investment Relations Officer/VP-Head