Megaworld to fully back Empire East’s P2.6B stock rights offering

MANILA, Philippines—Tycoon Andrew Tan-led Megaworld Corp. has committed to provide financial muscle to a P2.6-billion stock rights offering by its subsidiary Empire East Land Holdings Inc. (ELI), the unit tapped for a residential property venture with the Okada group in Pagcor City.

In a disclosure to the Philippine Stock Exchange on Wednesday, Megaworld said that it had committed to subscribe to all its rights offer entitlement and to any right offer shares not taken up by other shareholders.

“This will ensure that all 2.6 billion rights offer shares will be subscribed,” the disclosure said.

ELI plans to sell new stocks to existing shareholders at a ratio of one share for every four shares held at P1 per share. This will allow the company to raise about P2.6 billion from the rights offering.

“It is expected to be issued and listed on the PSE before the end of the year,” ELI president Charlemagne Yu said in a text message.

Megaworld owns 61.13 percent of ELI, the erstwhile mid-income residential development arm of the group. Empire East expects capital spending to reach P15 to P20 billion for the next five years to fund projects within Metro Manila and the Calabarzon area. In 2012, the company expects to launch 5,000 new residential units, up from 3,000 in 2011.

ELI recently signed a joint-venture agreement with the Okada group’s Tiger Resort Leisure and Entertainment Inc. and Eagle 1 Landholdings Inc. to take the lead with a majority stake in the development of a 12.95-hectare luxury residential resort condominium project in Entertainment City Manila. This P45-billion project will comprise more than 25 residential towers to be built in several phases, a signal of ELI’s serious bid to grab a piece of the high-end property market.

For this year, ELI expects net profits to rise by 15-20 percent, supported by progress on ongoing residential projects. Last year, net profit attributable to parent equity holders amounted to P179.38 million.

ELI currently has six ongoing projects—The Sonoma (Sta. Rosa, Laguna), San Lorenzo Place (Makati), The Rochester (San Joaquin, Pasig City), Pioneer Woodlands (EDSA corner Pioneer Avenue, Mandaluyong), Little Baguio Terraces (Aurora Boulevard, San Juan City) and Kasara (Pasig City).