By Arra B. Francia, Senior Reporter
CEMEX Holdings Philippines, Inc. (CHP) looks to secure shareholder approval to increase its authorized capital stock next month, amid plans to raise up to $250 million through a stock rights offering.
In a disclosure to the stock exchange Wednesday, the listed cement manufacturer said it will conduct a special stockholders’ meeting on Oct. 16 to obtain approval for the authorized capital stock increase.
CHP seeks to raise its authorized capital stock to P18.310 billion consisting of 18.310 billion shares with a par value of P1 each, from the current P5.195 billion.
The capital hike will allow the firm to hold a stock rights offering of up to $250 million. Proceeds from the transaction will be used to fund the expansion of its Solid Cement Plant in Antipolo, Rizal, as well as to improve its capital structure and provide flexibility to its balance sheet.
“Given CHP is currently operating at already high utilization levels, the Solid Cement Plant expansion is especially critical in allowing CHP to maintain its market position and continue to benefit from the Philippines’ long-term favorable demand outlook,” the company said.
The company said it will spend a total of $235 million to boost Solid Cement plant’s capacity by 1.5 million metric tons (MT), from the current 1.9 million MT. This will increase the firm’s overall capacity by 26%.
It targets to start operations for the new production line by the fourth quarter of 2020, with the products to be sold in the National Capital Region and Southern Luzon.
“The expectation is that the Solid Cement plant should be free-cash-flow accretive approximately during the second half of 2021.”
Analysts previously expressed concern over CHP’s stock rights offer given its dilutive effect on shareholders.
“CHP would also highlight that the proposed rights offering would be fair, transparent, and equitable to all shareholders,” the company said, adding that it will secure the necessary approvals from both the Securities and Exchange Commission and the Philippine Stock Exchange.
The company swung back to profitability in the first half of 2019 with an attributable profit of P802.32 million, against an attributable loss of P584.71 million in the same period a year ago. Gross revenues also improved to P12.356 billion, 4% higher year on year.
CHP is the local unit of Mexican cement and construction materials company Cemex S.A.B. de C.V. Its cement products are sold under three brands, namely Island and Rizal for Luzon, and APO for the Visayas and Mindanao.
Shares in CHP fell 7.67% or 23 centavos to close at P2.77 each at the stock exchange on Wednesday.