By Arra B. Francia, Reporter

CIRTEK PHILIPPINES Holdings Corp. looks to issue up to $200 million worth of preferred shares by November, which will primarily be used to pay debts incurred after acquiring US-based antenna firm Quintel earlier this year.

The listed electronics manufacturer said the offer will have a base size of $120 million, with an oversubscription option of up to $80 million. The issue will have an annual dividend rate of 5.25% to 5.75%, and may be redeemed after its fifth year anniversary.

“We expect approval to happen by November, first week… listed by end of November, or first week of December,” Cirtek Chief Financial Officer and Treasurer Anthony Albert S. Buyawe told reporters in a press briefing inside its manufacturing facility in Laguna on Thursday.

Cirtek tapped BPI Capital Corp. as sole book runner and co-lead underwriter of the offer, with RCBC Capital Corp. tasked to be co-lead underwriter.

Mr. Buyawe said a third of the proceeds will be used to pay existing obligations, with around 10% allotted for increased investments in research and development, while the rest will be for expanding capacity.

“That’s always been the objective — to de-lever our balance sheet, bring it down. Because if you can recall we used bridge funding for the Quintel acquisition, raised $60-$70 million, and that’s kind of heavy on the balance sheet,” Mr. Buyawe said.

The company last August completed its $77-million acquisition of Quintel, a company whose clients include large telecommunications companies in the US, including Verizon and AT&T.

Cirtek is also currently in advanced talks with a manufacturer in China to help expand its capacity, a move the company says will help cut labor costs, among others.

“What’s gonna happen is we’re going to expand our manufacturing and at the same time we’ll complement that with a subcontracting agreement with the group in China. There are certain advantages of doing that, number one is operations, they have committed that they can manufacture cheaper than we can,” Mr. Buyawe said.

The executive added this will also help them reduce freight costs since most of Cirtek’s raw materials are sourced from China.

“(There’s also the advantage on) logistics, there are more frequent flights obviously through land or through air out of China and the Philippines, and most likely cheaper also. So we want to take advantage of that,” Mr. Buyawe said.

Cirtek expects the manufacturing plant in China to be operational by the first quarter of 2018.

Asked if the company is eyeing potential acquisitions, Mr. Buyawe answered in the affirmative but noted that they would wait for Quintel to stabilize first.

“Our focus right now is really Quintel and growing the market, increasing the sales, making sure that the products we have in the pipeline come on stream on time… We will be releasing new products late this year,” Mr. Buyawe said.

Cirtek looks to generate $120 million in revenues for 2017, owing the increase to Quintel’s five-month consolidation under the company. By 2018, Cirtek said that Quintel’s contribution to revenues could reach $100 million.

Shares in Cirtek dropped 60 centavos or 1.41% on Thursday to close at P41.95 each.

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