Cirtek raising up to $200M via shares offering

Laguna-based electronics manufacturer Cirtek Holdings Philippines Corp. plans to raise up to $200 million through an offering of preferred shares in November, to fund future growth and pare debt after its acquisition of US-based antenna solutions provider Quintel.

In a briefing yesterday, 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 also dollar-denominated.

“Also, there’s demand for these kinds of products,” 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.

“Since it’s classified as equity, it improves our balance sheet and our gearing without diluting existing shareholders,” he said.

Projected dividend rate for the five-year preferred shares is between 5.25 percent and 5.75 percent per year.

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 the 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 in the electronics manufacturing value chain with its $77-million deal to acquire US-based Quintel. The consolidation of Quintel into Cirtek’s books in the last five months of this year is seen to add $20 million in revenue in 2017 and more than $100 million in 2018.
Revenue is seen hitting $120 million this year.

The company raised $60 million to $70 million in bridge financing to fund the Quintel acquisition but the plan was to convert part of these to term corporate notes.

Cirtek has also committed to pump in $30 million in additional working capital to boost the capacity of Quintel, a leading innovator of spectrum and space-efficient base station antennas for wireless networks. Among Quintel’s major customers are two of the top five telecom carriers in North America.