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THE Philippine master franchise holder of
McDonald’s said it has abandoned a plan to sell shares for the
first time to the public this year.
On the sidelines of the Empire
East Land Holdings Inc.’s stockholders’ meeting, George T. Yang,
Golden Arches Development Corp. (GADC) chairman, told reporters that
the company will no longer pursue its initial public offering (IPO)
this year, citing the volatile market.
“We have nothing planned in the
next few years,” he also said, thus ruling out a maiden share
offering in the near term.
Last year, the quick service
restaurant operator announced its plan to raise fresh capital
through an IPO in the second half this year. But then the market
turned sour after the US subprime mortgage crisis exploded in July,
causing volatility in financial markets worldwide to this day.
The new capital GADC would go to
product development and expansion.
In 2006, the company’s capital
expenditure went to opening 22 McDonald’s restaurants, marketing
programs and reinvestments in existing restaurants. GADC said it
used internal cash for the capex.
The company had tapped Ernst and
Young as financial advisor for the IPO.
GADC ended the first quarter this
year with a profit of P16.5 million, or 73 percent lower than last
year. Revenues climbed 6 percent to P1.89 billion, but earnings were
pulled down by the rising inflation causing cost of sales to
increase 9.7 percent to P1.54 billion. Operating expenses also rose
16 percent, with incremental expenses of P34 million due to one-time
expenses incurred for the fast-food company’s expansion
nationwide.
GADC plans to open at least 30
new outlets this year with six new stores launched in the first
quarter.
--Likha C. Cuevas-Miel
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