LISTED property developer 8990 Holdings, Inc. has sold P5 billion worth of receivables to free up funds for new projects.
The company told the stock exchange yesterday it has unloaded contract-to-sell receivables to local financial holding firm Dearborne Resources and Holdings, Inc., the same company it sold P2.8-billion receivables to last year.
8990 said it was able to generate the full value of the contracts, as the price of the sale was based on the principal balance of the receivables.
The sale was also made on a non-recourse basis, meaning Dearborne will take the risk.
“This brings the company’s total receivables sold to P15 billion in the past two years,” 8990 said, noting it was able to liquidate P10 billion from selling contract-to-sell receivables last year.
8990 has been selling its receivables in recent years to raise money to fund its projects, as an alternative to taking on debt. The company said its net debt-to-equity has now fallen below its covenant ratio of 1.5x, standing at 0.94x as of end-September.
“[T]he company will spend P4 billion this year on its various projects nationwide. In 2020, the company plans to double its capital expenditure to support its goal of hitting P20 billion by the end of next year…,” it said.
The property developer had P20.9 billion in receivables as of the first nine months of the year, which will be reduced following the P5-billion sale to Dearborne and the completion of its P2.5-billion securitization deal before the year ends.
Securitization is the process of transforming an illiquid asset into a security through quantitative analysis.
8990 is expecting to start generating revenues from its Urban Deca Homes Ortigas project by next year. This is its largest development in Metro Manila with more than 19,000 condominium units.
In the first nine months of the year, 8990 posted a 23% increase in earnings to P4.21 billion, driven by a 21% jump in revenues to P10.51 billion.
Shares in 8990 at the stock exchange shed 0.50 point or 0.51% to close at P97.50 each on Monday. — Denise A. Valdez
