Citing disadvantageous pricing, SLI postpones new shares offer

Housing developer Sta. Lucia Land Inc. (SLI) has shelved for now the re-initial public offering (re-IPO) worth up to P9.87 billion that it was supposed to launch next week, suggesting it would rather wait for more favorable market reception than sell new shares at a steep discount.

In a letter dated Nov. 4 sent to the Philippine Stock Exchange, SLI president Exequiel Robles said the company had planned this follow-on offering (FOO) not just to raise funds but primarily to enhance shareholder value.

“Given current market conditions and multiple common equity issuances pricing at a significant discount to their respective offer price ranges and more so to their current trading levels, the company believes that it will not be enhancing value for its shareholders if it were to agree to offer its shares at a price that is at a significant discount to the current market price,” Robles said.

SLI had wanted to sell up to 2.5 billion primary common shares, with an option to upsize by 500 million shares, within the price range of P2.38 to P3.29 per share. The offering, which was scheduled to run on Nov. 11 up to Nov. 17, would have brought its public ownership to 40.41 percent.

Upon receipt of the necessary approvals, Robles said China Bank Capital Corp., as the sole issue manager, lead underwriter and sole bookrunner, had conducted a book-building process to determine the final offer price.

“Unfortunately, after careful consideration of the results received during the book-building process, the company determined that it will not be in the best interest of the company and its shareholders to move forward with the FOO at this time. Thus, with great regret, the company has decided to postpone the FOO,” Robles said.

“The company is committed to enhancing value for all of its shareholders and believes that to continue such FOO under the current market conditions and circumstances would not be consistent with this objective,” he stressed.

Net proceeds were supposed to be used to finance capital outlays for new and ongoing projects, payment of short-term debt, strategic land banking and general corporate purposes.

SLI has a total of 115 ongoing projects, 60 of which are located in the high-growth areas of Cavite, Laguna, Batangas, Rizal and Quezon (Calabarzon region). It also has 25 projects in Davao while the rest are spread out in seven other regions. It also owns and operates Sta. Lucia Mall in Cainta, Rizal.

Most of its housing projects are located at the outskirts of major central business districts and major growth centers, thereby offering bigger space and more affordable pricing.