MEGAWIDE Construction Corp. signed yesterday a P5-billion corporate note facility which generated fresh funding to pay outstanding debt obligations and finance expansion programs.
In a statement to the stock exchange, the diversified infrastructure conglomerate said its offering was 1.5 times oversubscribed, attracting investors from the largest financial institutions in the Philippines.
Proceeds of the issuance will be used to retire maturing debt obligation, fund growth projects and finance general corporate needs.
“The lower spreads for the new instrument reflect the significantly reduced risks for Megawide from the time we secured the loan seven years ago, when we were just a pure construction play. With the addition of airport and landport operations, our cash flows have improved considerably and our income streams have become stronger, more stable and predictable,” Megawide Chairman and Chief Executive Officer Edgar B. Saavedra said in the statement.
He was referring to the P6.5-billion fixed-rate corporate notes that the company issued in 2012. This was used to finance the construction of classrooms that Megawide was building under a partnership with the government.
Megawide has since expanded its business from just construction to operation of several transportation terminals, both for land and air.
BPI Capital Corp., which acted as the lead arranger and bookrunner for the issuance, said the oversubscription in the corporate notes shows the faith of investors in Megawide’s expansion.
“The strong interest we received from both existing and new lenders of the company is a positive indication of the financial community’s confidence in the company’s future growth prospects,” BPI Capital President Chiqui Huang was quoted as saying in the statement.
Megawide added the timing of its issuance is perfect as it rides on the Philippines’ currently low interest rates, low inflation, stable currency and robust macroeconomic prospects.
The company booked an attributable net income of P649.72 million in January-September 2019, down by 51% due to higher financing costs.
Its shares at the stock exchange shaved off 16 centavos or 1.08% to close P14.64 apiece on Thursday. — Denise A. Valdez