Construction firm EEI Corporation is raising P2 billion from the private placement of preferred shares to pay for loans and fund future projects.
In a disclosure to the Philippine Stock Exchange (PSE), the firm said its board of directors has approved the proposed issuance of 20 million Series C preferred shares at P200 per share by way of private placement by RCBC Trust Corporation.
EEI said the offer or issue value for the transaction was the same issue value during the firm’s follow-on offering in Dec. 9 to 15, 2021 of up to 60 million preferred shares with a base offer of 40 million shares issued in two series (Series A and B) from EEI’s 240 million preferred shares.
The 20 million preferred shares with a par value of P0.50 will come from EEI’s unissued preferred shares which are cumulative, non-voting, non-participating, non-convertible, redeemable, and non-reissuable.
The shares are perpetual unless EEI exercises its sole option to redeem at the seventh year from the date of issuance.
The dividend rate for the preferred shares has been set at 6.75 percent per annum payable quarterly starting on the third month from the date of issuance.
“The conduct of an equity fund raising by way of a private placement allows EEI to raise equity funds in a most expeditious and efficient manner, with the least cost to EEI,” the firm said.
It added that “the net proceeds of the offer shall be used to strengthen balance sheet, retire working capital loans, fund the company’s future projects, and for general and working capital requirements.”
For its 2021 follow-on offering of preferred shares, EEI said that “with the advent of new mega-infrastructure projects being projected to be issued by the Government, the Corporation seeks to raise additional capital in order to position itself to take advantage of this opportunity.”
Thus, it issued preferred shares to improve EEI’s contracting capacity, mitigate any lengthened cash conversion cycle on existing projects, strengthen its equity base, improve debt to equity ratio, and to hedge against any future credit crunch.
The firm said strong demand for its preferred shares from investors resulted in an order book that was 4.85 times oversubscribed compared to the base offer of P4 billion. This allowed EEI to exercise the oversubscription option and upsize the total offering amount to P6 billion.
"EEI's Preferred Shares were oversubscribed with strong demand from institutional and retail investors who want exposure to a major player in the infrastructure development of the country," said RCBC Capital Corporation, the sole issue manager of the offering.