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A COAL mining and trading company said it would raise
fresh funds for exploration and expansion through an initial public
offering (IPO) despite hostile market conditions, citing “strong
investor appetite” for the fossil fuel.
In a statement, Sultan Mining and
Energy Development Corp. (SMEDC) said it submitted its application
for registration and listing of 480 million shares with the
Securities and Exchange Commission and the Philippine Stock
Exchange.
The new common shares to be
offered to domestic investors is equivalent to 33.5 percent of
SMEDC’s outstanding capital stock after the IPO. At present, the
coal firm is 78.71 percent owned by Murphy Consolidated Holdings
Corp.
Asian Alliance Investment Corp.
was tapped as lead underwriter for the capital raising activity.
SMDEC shareholder Maxinvent Trading Corp. would allow the
underwriter to avail of an option to buy or place up to 48 million
SMEDC shares or 10 percent of the offer for over-allotments.
Of the total shares for sale, 4.8
million shares or 10 percent of the offer would be made available to
local small investors.
According to SMEDC, net proceeds
would be used to partially finance its capital expenditures,
particularly the exploration of its coal operating contract (COC)
areas and improvements and expansion of coal extraction and
processing facilities. It also plans to use the funds to pay
existing bank debt and to finance working capital requirements.
The firm was incorporated on
August 2007 as a mining and energy company that is in the business
of exploration, extraction, processing and marketing of mineral and
coal reserves and converting these into power directly or through
subsidiaries or affiliated companies.
In September last year, SMEDC
raised its authorized capital stock from P10 million to P1.5 billion
so that it can acquire 100 percent of sister company M.G. Mining and
Energy Corporation (MGMEC) through a share swap. MGMEC is also
engaged in coal mining exploration and extraction, processing and
trade of coal and other energy related products.
The new subsidiary holds or
exercises rights over four COCs, three of which cover an aggregate
of 10,740 hectares of fully explored coal bearing area in Bislig and
Lingig, Surigao del Sur. It secured from the Department of Energy
its fourth COC for coal resources in Argao, Cebu covering 1,608
hectares in February 2005.
MGMEC also has an indirect
beneficial interest equivalent to 12.96 percent of Sultan Energy
Philippines Corporation (SEPC), the owner of a concession area of
approximately 7,000 hectares within the Daguma coal deposit in South
Cotabato and Sultan Kudarat in Mindanao.
Sultan, through MGMEC, started
open pit mining operations in the Bislig deposit and is ramping up
production after completing mine plans, organization build-up, and
road infrastructure. Sultan currently delivers coal to various
customers in the power, cement and other industries.
--Likha C. Cuevas-Miel
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