Auction delay slashes P18B from Semirara’s market value

MANILA, Philippines — Semirara Mining and Power Corp. (SMPC) saw about P18 billion in market value wiped out following the government’s decision to defer the coal auction indefinitely, putting a strain on investor confidence.

Peter Garnace, equity research analyst at Unicapital Securities Inc., said the losses were recorded in just two days after investors “priced in the uncertainty” of the agency’s move.

SMPC, the largest coal producer in the Philippines, has a 50-year contract with the government set to expire in July 2027.

The Department of Justice rejected its wish for a 13-year extension. This prompted the Department of Energy (DOE) to launch a bidding process.

“As investors reacted to heightened uncertainty around the process, with no clear timeline for the auction, market sentiment is likely to remain cautious, with investors staying on a risk-off stance until greater clarity emerges,” Garnace told Inquirer on Wednesday.

READ: Gov’t puts Semirara, 2 other coal areas on auction block

Preserving cash

“With uncertainty ahead, management may opt to preserve cash to strengthen its balance sheet, which could potentially delay its highly anticipated dividend declaration,” he added.

On Wednesday, SMPC’s shares went up by 3.8 percent to close at P27.35 each.

A document dated April 24, posted on the DOE website, said the deadline of the submission and opening of bid documents had been “postponed until further notice …”

The bidding was initially set on April 28.

READ: Semirara hopes to win coal mine bidding

The DOE said it would address all issues and concerns raised during the presubmission conferences.

“This will afford all participants sufficient time to prepare their respective bid documents,” the DOE said.—INQ