Cirtek plans up to $200M preferred shares offer
Laguna-based electronics manufacturer Cirtek Holdings Philippines Corp. plans to raise as much as $200 million from an offering of preferred shares this November, seeking to fund future growth and pare debt after its acquisition of US-based antenna solutions provider Quintel.
In a press briefing at the company’s production hub in Laguna on Thursday, Cirtek chief finance officer Anthony Buyawe said Cirtek had mandated BPI Capital and RCBC Capital to arrange the offering of US dollar-denominated preferred shares to the domestic market with a tenor of five years.
Buyawe told reporters that Cirtek was issuing preferred shares in US dollar denomination because the company’s revenues were denominated in US dollar and that 65 percent of the company’s cost structure was likewise denominated in this currency.
“Also, there’s demand for these kinds of products. That’s what our underwriters indicated also,” Buyawe said.
Cirtek plans to offer a maximum of 200 preferred shares, raising at least $120 million plus additional $80 million in case of oversubscription. It will only be the second Philippine company to list US dollar-denominated securities on the Philippine Stock Exchange after Del Monte Pacific Ltd.
Article continues after this advertisement“Since it’s classified as equity, it improves our balance sheet and our gearing without diluting existing shareholders,” he said.
Article continues after this advertisementProjected dividend rate for the five-year preferred shares is between 5.25 percent and 5.75 percent per annum.
Subject to regulatory approvals, Cirtek hopes to launch the offering by November and list the preferred shares on the PSE on the same month or by first week of December.
About a third of the proceeds will be used to pay down existing obligations while the rest will fund potential acquisition and growing the business by expanding Cirtek’s manufacturing capacity. About 10 percent will be earmarked for research and development.
Cirtek has moved up the electronics manufacturing value chain with its $77-million deal to acquire US-based Quintel. With the consolidation of Quintel into Cirtek’s books in the last five months of this year, the deal is seen to add $20 million in revenues this 2017 and over $100 million in 2018.
Revenues are projected to reach $120 million this year.