Construction and engineering firm Megawide Construction Corp. is raising P2.2 billion from the sale of treasury shares, placing out some of the shares previously bought back from the family of tycoon Henry Sy Sr.
Megawide has signed an agreement to offer and sell 150 million common shares held in treasury at P14.90 each, the company disclosed to the Philippine Stock Exchange Friday.
The offer was priced at a discount of 4.7 percent from the closing price of P15.64 a share at the local stock market on Oct. 27, the day that a placing agreement was signed with CLSA Ltd. as sole coordinator and sole book runner and First Metro Investment Corp. as domestic manager.
The sale will be done through an accelerated overnight equity placement with settlement expected on Nov. 4, raising P2.2 billion in gross proceeds.
“The proceeds of the placement will be used for partial repayment of the bridge loan availed for the purchase of Megawide common shares from Sybase Equity Investments,” the disclosure said.
The bloc purchased from Sybase consisted of 410.84 million Megawide common shares now lodged in the company’s treasury, equivalent to around 17 percent of total shares.
These were bought back at P10.0379 per share.
Sybase invested when Megawide went public in 2011. The Sy family had to sell its shares as Megawide was diversifying into other businesses, including power generation.
Because the Sys control the majority of National Grid Corp. of the Philippines, the country’s main electricity superhighway, it has restrictions on being affiliated with companies engaged in power generation.
Under its diversification plan, Megawide will focus on four core businesses: construction, airport operation, transport and power generation with a focus on renewable energy.
In 2015, construction accounted for 66 percent of total income, with the airport business bringing in 34 percent.
Megawide holds the concession to operate Mactan Cebu International Airport (MCIA). The construction of MCIA’s terminal 2 is proceeding on schedule and will increase airport capacity to 12.5 million passengers once completed.
Despite a design capacity of only 4.5 million passengers a year, the existing terminal 1 accommodated almost eight million passengers last year, attributed to improvements and changes in the flow of passengers that reduced congestion. The group expects the airport to serve nine million passengers this year.
On the other hand, the Southwest Integrated Transport Terminal (SWITS)—which will begin construction this fourth quarter along the Cavite Expressway in Paranaque City—is positioned as Megawide’s entry into the property sector.
The P3.5-billion SWITS project, which will completed by 2018, is expected to bring in a mix of transportation infrastructure supported by mixed-use retail and commercial recurring revenues.
Megawide expects to generate P17 billion in revenues this year, up by about a fifth from last year’s level.