BIÑAN, Laguna: CIRTEK Holdings Philippines Corp. is planning to issue dollar-denominated preferred shares amounting to $200 million as part of its strategy to raise capital.
Cirtek will issue $120 million worth of preferred shares with an overallotment option of up to $80 million. It expects to make the offering by the end of November or early December once its application is approved by the Securities and Exchange Commission (SEC).
“Our revenues are all in US dollars as well, in that way we’ll manage our foreign exchange risk. Our cost also, about 65 percent of our cost is in US dollars, so our functional reporting currency is in US dollars. So I think it makes sense to us to try the US dollar” denominated equity issue, Cirtek Chief Finance Officer Anthony Buyawe told a news conference here on Thursday.
“At the same time, I believe there’s a demand right now for these kinds of product so that is what our underwriters also indicated,” he added.
BPI Capital Corp. has been tapped as the sole bookrunner and arranger, while also serving as co-lead underwriter along with RCBC Capital Corp.
If given the green light by the SEC, irtek will be the second local company to issue dollar-denominated securities following Del Monte Pacific Ltd.’s $250 million issuance.
Proceeds of the issuance will be used to finance Cirtek’s debt obligations, potential acquisitions and in growing the business by expanding capacity and investing in research and development.
“We raised $60 million for the Quintel acquisition. The plan is to convert part of that to term corporate notes.
We’d take a look at what we’ll retire but it’s going to be a mix of some term facility and also some of our existing working capital,” Buyawe said.
“We’ll stabilize the business of Quintel first to fully integrate it and our focus right now is really Quintel and growing the market based on sales, making sure that new products that we have in the pipeline come on stream on time,” he added.
As part of its expansion, Buyawe said Cirtek is in advanced stages of talks with a China-based firm tasked “to manufacture Quintel antennas here, but at the same time we’ll complement that with a subcontracting arrangement with a group out of China.”
“There are certain advantages of doing that–number one, the [Chinese firm has] committed that they can actually manufacture for that. Number two, in terms of raw materials and ecosystem, most of the materials that we’re gonna use are all coming out of China so it effectively reduces our cycle time and also to effectively reduce your cost, kasi wala nang [because there are no more]freight [costs]if you’re doing manufacturing in China. Number three, the outbound logistics, there are more frequent flights obviously through air and through sea out of China compared to the Philippines and they’re probably cheaper also,” Buyawe said.