EAGLE CEMENT Corp.’s decision whether to raise its public float will depend on the strength of the local bourse, as it prepares to comply with the looming implementation of a 20% minimum public ownership of listed companies.
Monica L. Ang, Eagle Cement chief financial officer, said the company will decide how to go about the increase once the Securities and Exchange Commission (SEC) releases the implementing rules and regulations (IRR) of the order.
“We are expecting that with the new IRR, we’ll be required to increase our public float to 15% as the first step and then 20% in two years time. With regard to schedule whether we’ll do the 20 right away or two step 15 and 20, it is still up for discussion. It depends on market conditions,” Ms. Ang said.
The Ramon S. Ang-led cement manufacturer listed on the Philippine Stock Exchange on May 29, bidding out only 11.5% of the company’s outstanding shares to the public, or just above the SEC’s current minimum of 10%.
Based on a draft memorandum released by the SEC in June, companies applying to list on the bourse starting July will be required to have a minimum public float of 20%. Firms already listed but with a float of less than 15% will have until the end of 2018 to reach this floor, before ultimately reaching 20% by 2020.
Eagle Cement President and Chief Executive Officer John Paul L. Ang noted that the capital raised while the company complies with the SEC’s minimum requirement will be used for expansion, particularly for the acquisitions and the construction of factories.
“The plan will always be to put up something new… If we build Cebu and whatever factories we plan in the near term, we see na viable ang mga projects na ’yon (that these projects are viable),” Mr. Ang said, referring to the ongoing construction of the company’s fourth production line in Cebu, which targeted to be operational by 2020.
Ms. Ang said for an acquisition to qualify, “the area must be close to a strategic market.”
“It should also have the proper permits. It should have good standing at the compliance stage, and also the valuation — how much the owners right now are selling to us,” she said.
Eagle Cement is constructing its third production line in San Ildefonso, Bulacan, which will add 2 million metric tons (MT) to its capacity by 2018. It targets to end 2020 with a total capacity of 9.1 million MT, after finishing the construction of the fourth line in Cebu.
The company’s expansion comes amid the Duterte administration’s push for a massive P8-trillion infrastructure program.
In the first quarter of 2017, Eagle Cement booked a 30% year-on-year increase in its net income to P1.03 billion, driven by a 19% uptick in net sales to P3.17 billion. — Arra B. Francia
