Bio Pappel joins the group of issuers that exodus from the stock market. The decision of the owner of the Scribe brand was driven by the low valuation of its titles in recent years. With its withdrawal, the company will have to look for sources of financing outside the stock market, which in the opinion of analysts, would be a better option for the company that was undervalued in the capital market.
“The capital outflow does not imply that it closes in on the debt market, where it has participated more actively. You always have the option of bank financing and you should not have great obstacles when you improve your financial position in order to be an acceptable risk customer for the bank, ”says Carlos Hermosillo, an independent stock market analyst.
Hermosillo points out that, given the little movement in the purchase and sale of Bio Pappel shares on the Mexican Stock Exchange (BMV), the financing model in the capital market does not make much sense for the company, since it does not allow them a significant uptake of resources.
For now, Bio Pappel, Miguel Rincón’s company, has a defined strategy: it will build two plants to meet the increased demand for corrugated packaging driven by the increase in electronic commerce. The first, located in Dallas, Texas, in the United States and the other in Tizayuca, Hidalgo, in Mexico.
80% of sales in the first quarter of this year came from the brown paper and packaging segment, which compensates for the decrease in sales in the printing and writing paper segment, which was affected by online classes and the closure of offices .
The paper mill obtained a 5.2% increase in its income from January to March of this year, to 7,211 million pesos. On the contrary, its operating cash flow decreased 5% to 1,201 million, according to its financial statement data.
“The company does not lose much when going public. The company has done well although it has had positive results in its financial operations and did not see benefits from having a public offering. It has some contracted loans that place restrictions on it, such as merging with a third party and they must maintain control of the company, and these limitations restrict the advantage of being a public company, “says Iván Santiago, CEO and investment manager of BlackBull Advisors.
Imminent goodbye
The delisting process progresses. Enverlis, the company that the brothers Miguel and Jesús Rincón Arredondo formed to buy Bio Pappel, presented a second Public Offering of Acquisition (OPA) to acquire the shares that it does not yet own in the company and complete the exit from the Stock Market. This subsequent offer is to acquire 7.5 million shares that are still freely fluctuating in the market.
For these shares, which are equivalent to 2.6% percent of the total company, Enverlis will pay 61.32 pesos per share, so it could pay up to 459.3 million to achieve its objective.
Enverlis raised its stake from 85.7 to 97.4%, after a first takeover bid that took place last October, in which it bought 34 million shares at a price of 26 pesos each. To do the delisting, the holding company had to own more than 95% of the titles of the company.
The price differential per paper between the first and the second repurchase offer is related to market conditions, in this case, with the rise in each of Bio Pappel’s shares after last October.
Bio Pappel closed the day on June 30 with an increase of 0.67% to 50.90 pesos per paper, after a rebound in the price that had a minimum in its quotation on March 10, 2009, when each share was worth 0.98 pesos.
“Now the future of the company will depend on the economic conditions of the country and it will depend on its efficiency in its generation of inventories, on how it handles the debt with its suppliers and the efficiency of its internal operation,” says Santiago.
