MEGAWIDE Construction Corp. on Monday set the dividend rate for its follow-on offering of Series 4 preferred shares to 5.3%.
The listed infrastructure and engineering company has just received approval from the Securities and Exchange Commission and the Philippine Stock Exchange (PSE) for its P4-billion offering.
Megawide aims to conduct the offer from Oct. 13 to 19, with the listing tentatively set to Oct. 29. Shares will be listed under ticker symbol “MWP4.”
The offer consists of 30 million preferred shares at P100 apiece, with an overallotment option of 10 million preferred shares. The company said the shares will be subject to a dividend step-up rate unless it redeems the shares three and a half years from its listing date.
Proceeds from the offer will be used to redeem its Series 1 preferred shares by December to avoid the step-up rate. Megawide said the Series 1 preferred shares come with a 7.025% coupon rate per annum, with a call option on its seventh anniversary, and a maximum step-up rate of 487.5 basis points if the call option was not used.
“Part of our financial game plan is to streamline our balance sheet to support our expansion programs, especially our pivot to infrastructure,” Megawide Chairman and Chief Executive Officer Edgar B. Saavedra said in a statement on Monday.
The follow-on offering will allow the company to maintain a “comfortable” debt-to-equity (D/E) ratio and be able to accommodate capital-raising plans in the future.
As of end-June, the company logged an improvement on its D/E ratio at the parent level with 1.1x versus 1.15x at the end of last year and versus the 2.33x covenant agreed with lenders.
“With a manageable D/E ratio, we will have more flexibility to raise funds to pursue more projects in the infrastructure space, which we think will be critical in jumpstarting the economy,” said Mr. Saavedra.
Megawide has submitted bids for the Metro Manila Subway Project and for the North-South Commuter Rail Southline. It also intends to participate in the electro-mechanical and track works for majority of the Malolos-Clark Railway Project (MCRP) alignment.
The company is also part of the consortium undergoing civil works for MCRP’s Package 1 with Hyundai Engineering and Dong Ah Construction Corp.
Megawide said the successful offering will allow it to replace the original preferred shares with a lower dividend rate.
“We have been embarking on a long-term financial management program to achieve a more balanced and efficient capital structure moving forward, taking advantage of the current accommodative benchmark rates to realize savings while also stretching our maturity towers as we continue to navigate through this pandemic,” said Ramon H. Diaz, Megawide’s group chief financial officer.
On Monday, shares of Megawide at the stock exchange rose by 4.3% or 27 centavos to finish at P6.55 apiece. — Keren Concepcion G. Valmonte
