Discovery World defers P1B IPO

MANILA, Philippines—Discovery World Corp., developer of upscale beachfront resort Discovery Shores Boracay, has deferred its P1-billion initial public offering  which would have originally run through the so-called “ghost” month period.

DWC wrote the Philippine Stock Exchange to request the deferment of the IPO to a later date, citing “certain forthcoming events that we believe will have a material positive impact on the company, its business, and future prospects.”

“We have decided to await these developments prior to undertaking our IPO to give prospective investors a better basis for making an investment decision relative to our share offering,” DWC said in a letter posted by the PSE on Friday.

Based on the earlier terms approved by the PSE, Discovery World’s IPO was originally set to run from August 12 to 19, challenging the so-called “ghost month” period,  while listing on the main board of the local bourse was set for August 29.

Discovery World will sell 306 million new common shares at P3.28 per share, bringing 40 percent of its stocks under public ownership. The company will have a market capitalization of P2.5 billion after the IPO.

The issue manager and underwriter for the offering is Abacus Capital & Investment Corp.

The company plans to use proceeds from the offering to invest in new businesses (P575 million), retire debt (P325 million) and boost working capital (P55.19 million). All these expenditures are set for the third or fourth quarter of this year.

For new business ventures, the company is looking to acquire 20 percent of hotel and restaurant management school Enderun Colleges, 100 percent of cruise operator Discovery Fleet Corp. and to buy into Palawan Cove Corp., a company that owns beachfront properties in San Vicente, Palawan.

Discovery Fleet currently operates one cruise boat with about 50 rooms, offering full diving and non-diving programs. For divers, it packages cruises to Tubbataha Reef, with Cagayancillo and Calusa as add-on options, while for non-divers, it offers cruises bound for Pandan Island, Coron and Apo Reef.

Palawan Cove is still under construction and is expected to start operations by the second quarter of 2016.

Discovery World is 66.07 percent owned by JKTC Equities Inc., the investment holding firm of the Tiu family, and 33.93 percent by The Discovery Leisure Co. Inc., the company managing Discovery Shores Boracay and the holders of shares in Discovery Fleet and Palawan Cove that the company will acquire. Their stake will be diluted to 39.61 percent and 20.34 percent, respectively, after the IPO.

The “ghost month” period refers to the seventh month of the Chinese Lunar calendar, which falls this year on August 7 until September 4. During this period, many Oriental investors refrain from getting into big-ticket investments, thereby usually resulting in thinner trading volumes at stock markets. The season also coincides with the peak of the summer holiday season in the West, when many fund managers take a long vacation break.