SEC approves public stock offering of Coal Asia

The Securities and Exchange Commission has approved a plan by Coal Asia Holdings, a coal and energy holding firm that controls the country’s second-biggest coal reserves, to conduct an initial public offering worth P800 million.

Based on a registration statement cleared by the SEC en banc in a meeting on Thursday, Coal Asia will offer 800 million primary common shares at the maximum price of P1 each. This price tag is also the par value of the company’s shares, which means that the offering is priced at the same level as the entry of Coal Asia’s incorporators.

Coal Asia plans to conduct the public offering before the year ends, specifically in the early part of the fourth quarter but the final dates will be announced upon approval by the Philippine Stock Exchange.

The offering will bring to public hands about 20 percent of the company’s ownership. The company plans to list its shares on the first or main board of the PSE.

As of June this year, Coal Asia’s assets amounted to P3.28 billion, of which 95.55 percent consisted of coal reserves amounting to P3.13 billion. The company owns 100 percent of Titan Mining and Energy Corp. (TMEC), which has three coal operating contracts—one in Manay, Davao Oriental, and two in Zamboanga-Sibugay (Muyo Buug and Diplahan Siay).

In its prospectus, the company said proceeds from the offering would be used “for ongoing site development, initial large-scale operation and further explorations in the sites.”

Local investment house Abacus Capital Investment Corp. was mandated to arrange the IPO.

The company plans to use the P726.87 million in net proceeds from the IPO to bring the Davao Oriental mine into production by 2014 and the Zamboanga Sibugay mine by 2015. Of the proceeds from the IPO, P100 million will be spent for the completion of the exploration and feasibility study of the Davao Oriental mine, P400 million for the development of the Davao mine and the balance for continued exploration at the Zamboanga Sibugay mine.

“Coal deposits from Davao Oriental will be extracted mainly through open pit, eventually moving into underground mining [while] coal deposits from Zamboanga-Sibugay project will be extracted through underground mining right from the initial stages of extraction,” the disclosure said.

Coal Asia is owned by the following, each of whom owns 20 percent each: Dexter Tiu, Jaime Ang (president), Alexander Tiu, Gertim Chuahiong and Eric Roxas. After the IPO, their interest will be trimmed to 16 percent each and their shares will be under a two-year lock-up period.

Incorporated only last June 22, Coal Asia has an authorized capital stock of five billion common shares, of which 3.2 billion are issued and outstanding.

Coal Asia also plans to supply steam-grade coal to cement plants, canneries and manufacturing plants that have converted their diesel-powered plants into coal-powered facilities to mitigate costs.