Megawide to raise P5B for expansion plan
Megawide Construction Corp., a listed contractor now venturing into infrastructure projects like airports and power, is planning to raise about P5 billion toward the end of the year to finance its diversification plans.
Megawide chief financial officer Oliver Tan told reporters last week that the company was mulling over a potential share sale in the latter part of 2014 although he did not rule out tapping the debt market anew.
Tan said Megawide, which has bagged four out of seven public private partnership (PPP) projects awarded so far—including a P17.5-billion contract to expand and operate Cebu’s main air gateway—wants more projects as part of their goal double profits in three years. He said the company, partly owned by billionaire Henry Sy Sr., is still in talks with banks on how best to arrange the deal.
“We are beefing up our balance sheet in preparation for other PPP projects in the pipeline. So there is a need to expand our equity base. It will allow the company to participate in different big ticket items,” Tan said.
As noted, the company was looking to raise a “decent size” of P5 billion, Tan said. This was revised from initial plans to raise about $120 million given the foreign exchange volatility and due to the fact that Megawide’s revenues are all peso-based, he said.
The fresh funding was needed as Megawide said it would participate in new infrastructure projects the government was planning under its cornerstone PPP program.
Megawide also announced last Monday that it plans to enter the renewable power generation business in partnership with PhilCarbon Inc.
That would involve rolling out 100 megawatts of solar power plants, wind farms and hydroelectric facilities over the next two years at an estimated investment cost of $100 million, Tan said.
The company has already signaled plans to pursue an equity offer, as it sought shareholder approval to increase its authorized capital from P2 billion to P5 billion, from which it plans to create preferred shares.
“This is just to give us flexibility [in fundraising],” Tan said. With new income streams apart from traditional construction, Megawide would double profits last year to about P2.8 billion by 2017, he explained.
