Coal Asia Holdings shares up by 50% in market debutBy Doris C. Dumlao
Philippine Daily Inquirer
MANILA, Philippines—Shares of Coal Asia Holdings soared by 50 percent in the company’s stock market debut on Tuesday on optimism over its vast coal reserves alongside prospective diversification into power-generation and gas-exploration businesses.
Coal Asia, which raised P800 million from the sale of shares to investors at the par value of P1 each—or at the same entry level as its incorporators—hit the maximum price ceiling on the Philippine Stock Exchange to close at P1.50 each. About P427.3 million worth of Coal Asia shares changed hands, becoming the third-mostly actively traded stocks in the local bourse on Tuesday.
The offering was oversubscribed some three times over.
“Coal Asia provides the investor an opportunity to participate in a promising greenfield project—touted to have the second-largest reserves in the country and become the market leader in high-grade bituminous coal; with possible expansion into power generation,” said local stock brokerage DA Market Securities.
Coal Asia’s equity build-up after this IPO is seen allowing its subsidiary Titan Mining and Energy Corp. to complete its exploration and mine development activities in the Mindanao area. The net proceeds from the IPO are earmarked to bring its Davao Oriental mine into production by 2014 and its Zamboanga Sibugay mine by 2015.
“More importantly, it will enable Coal Asia to supply enough coal for the expected explosion in demand by large-scale energy producers racing to establish their coal-fired energy-generating plants as well as for cement plants already in place in the region as they too prepare for the impending growth of Mindanao through the government’s plans to establish key economic zones in the country’s southern-most region,” the company said in a press statement after Tuesday’s listing.
Dexter Tiu, a director at Coal Asia, said the company itself has been in talks to invest in a coal-fired power generation being planned to rise beside its Davao Oriental mine. He said the company has been talking with two local groups to build a 100- to 200-megawatt power plant that would utilize all of the coal production of the Davao Oriental mine.
Coal Asia is also finalizing talks to acquire a stake in VenturOil, a company with interests in oil fields off the coasts of Palawan as part of its planned diversification into oil and gas exploration.
VenturOil expects to start producing up to 11,440 oil barrels per day by 2013, translating to a gross cash flow of over $315 million.
Coal Asia chairman Harald Tomintz said the decision to go public affirmed the company’s commitment to the progression of the local coal mining industry and the bridging of the gap of the local energy sector. “Aside from Coal Asia plans in developing the local coal mining industry to be self-sufficient, the company would like to solidify its commitment to be a serious player in the local energy sector, particularly in alleviating the power shortage in the Mindanao area, the very center of all our operations,” Tomintz said.
In addition to the power-generation sector, Coal Asia also seeks to supply steam-grade coal to country’s cement plants, canneries, and manufacturing plants that have converted their diesel-powered plants into coal-powered plants to mitigate costs. The company has already bagged off-take contracts both here and abroad but is considering export markets including India, Japan, Taiwan, Hong Kong and Vietnam.
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