Eagle Cement plans P9.2B IPO

Eagle Cement Corp., the country’s fourth largest cement-maker, plans to raise as much as P9.2 billion from an initial public offering as early as May this year to partly fund construction of a big new production hub in Cebu.

In a prospectus dated Feb. 24 filed with the Securities and Exchange Commission, Eagle Cement – which is controlled by business tycoon Ramon S. Ang who also leads storied conglomerate San Miguel Corp. – proposed to offer up to 575 million shares at a price per share of as much as P16.

The base offer will consist of 500 million primary common shares while 75 million secondary shares were earmarked as overallotment in case of excess demand. For the secondary portion, the selling shareholder is Far East Cement Corp.

The cement-maker has mandated China Bank Capital Corp., PNB Capital Corp. and SB Capital Corp. as arrangers.

Net proceeds from the offer will be used to partially finance construction of a cement plant in Cebu, which will have a two-million metric ton annual capacity. Project cost is estimated at P12.5 billion.

The Cebu facility will include a manufacturing plant, a distribution center and marine terminals in the Southern Luzon regions, Visayas and Mindanao regions.

Based on the prospectus, the initial target is to conduct the offering from May 2 to 9 this year while listing date is proposed on May 16. But Ang said the company was “still working on timeline.”

Construction of the cement plant is estimated to start in the fourth quarter of this year while completion is targeted by the first quarter of 2020.

Since starting commercial operations in 2010, Eagle Cement has grown to become the fourth largest player in the Philippine cement industry based on sales volume. Through its fully-integrated business model, the company seamlessly integrates critical raw material supply with modern manufacturing technology, resulting in what it pitches as “one of the most efficient cement manufacturing operations in the country.”

Driven by the government’s strong push to ramp up infrastructure spending in the coming years coupled with prospective shortfall in local cement production, Eagle Cement believes that now is the most opportune time to increase its cement manufacturing capacity and expand its distribution coverage.

Eagle Cement president Paul Ang said: “As a local company, we are 100-percent focused on growing our business to take advantage of the opportunities offered by the continuing economic development of the Philippines. We have every confidence in the government’s ability to deliver the increase in infrastructure planned and we will continue to invest in additional capacity and to expand our coverage across the country. As well as completing our third line in Bulacan, we plan to install a new plant in Cebu with modern distribution facilities across the Visayas and Mindanao regions.”

The IPO is seen as a key step in achieving Eagle Cement’s goals. Ang said 100 percent of the funds raised from the IPO would be invested in the company, enabling it to realize our ambitions in the shortest possible time”

The company’s primary cement production facility is located in San Ildefonso, Bulacan which consists of two production lines. Together with its grinding plant in Bataan, its combined cement production capacity is around 5.1 million metric tons or 130 million bags per annum.

The cement-maker currently distributes its products in the Luzon region which constitute about 65 percent of total cement demand in the Philippines.