Mass housing developer 8990 Holdings Inc. is planning to offer P3 billion worth of securitized notes next year, in addition to a P5 billion preferred shares offering announced last week, 8990 Chairman Mariano Martinez Jr. said in a media briefing on Friday.
“The preferred shares will probably be issued by about June or July. The underwriter is Chinabank Capital. There will be a shelf registration of P10 billion but the initial uptake is just P5 billion, so that’s in process right now,” Martinez said.
Martinez noted that the P3 billion securitization will also be handled by Chinabank Capital and that a total of 5,222 accounts are already undergoing legal due diligence.
“After which it will be submitted for financial audit and then a rating, so that will happen also next year,” Martinez said.
The chairman noted that proceeds of the securitization would be used to pay off the liabilities incurred by Contract-To-Sell (CTS) receivables.
“So we’re basically turning it from a receivable to either a preferred share or into an actual securitized process so this will allay the anxiety by some of our shareholders as well as bankers on the growing CTS receivable liability,” Mariano said.
The tenor for the P3-billion securitization will be 20 to 25 years, according to Mariano.
“But right now, the present taste of possible investors is 20 years,” the chairman said.
Moreover, Mariano noted that the firm is hoping to forge more partners with banks in terms of selling CTS receivables.
“The expectation is for next year to be able to sell another P5 billion of receivables to the banks. And with the securitization being a pioneer form of selling your receivable, our desire is that we might be able to do this on a yearly basis as we build up on the seasoning of our accounts,” Mariano said.
Earlier this year, 8990 announced that it has already sold a total of P11 billion worth of CTS receivables to different banks. Among these deals are the P3 billion CTS purchase agreement with BDO Unibank, P1 billion with BPI Family Bank, P2 billion with Security Bank and P5 billion with Chinabank.
Last week, 8990 announced its plans of issuing a maximum of P5 billion worth of perpetual preferred shares, the proceeds of which would be used for land bank purchase, working capital, and retirement of loans.
In the first nine months of the year, 8990 posted a percent growth in net income to P3.19 billion from the P3.17 billion in the previous year.