Yuchengco-led EEI Corp. is converting P11.42 billion worth of debt into equity in First Orient International Ventures Corp., clearing the subsidiary’s liabilities and increasing its own stake in the company.

In a share subscription agreement, EEI said on Friday that it agreed to swap liabilities totaling P11.42 for 53,195 common shares in First Orient, subject to approval by the Securities and Exchange Commission.

The debt came from advances made by First Orient’s previous shareholders, which the company was unable to repay, according to its 2024 audited financial statements. 

By converting the debt into shares, EEI removes a major financial burden from First Orient and replaces it with equity.

EEI said the transaction is meant “to strengthen the Corporation’s balance sheet, improve creditworthiness, and enhance operational flexibility, while allowing the Subscriber to formalize capital support and increase its ownership stake.”

EEI had earlier acquired 100 percent of First Orient’s outstanding shares, or 46,805 common shares.

The latest deal increases EEI’s equity position further through a debt-to-equity swap, simplifying the company’s capital structure and future financing plans.

As part of the transaction, EEI also obtained creditor consent to step in as the new debtor in place of First Orient, allowing the advances to be formally transferred and converted into equity.

The agreement will take effect only after the SEC approves First Orient’s application to pay the share subscription in non-cash consideration. If the regulator rejects the application, the agreement will automatically be void.

Likewise, the share swap will comply with Bureau of Internal Revenue rules, including documentation requirements and the payment or exemption of applicable taxes.