The Securities and Exchange Commission (SEC) has approved the planned bond offering of Megawide Construction Corporation worth up to P5 billion.
In its meeting on June 18, the Commission En Banc resolved to render effective the registration statement of Megawide covering up to P4 billion of fixed-rate bonds, with an oversubscription option of up to P1 billion, subject to the company’s compliance with certain remaining requirements.
The bonds will consist of series C bonds due 2027, series D bonds due 2029, and series E bonds due 2031.
Assuming the oversubscription is fully exercised, the listed company expects to net P4.93 billion from the offer.
Proceeds will be used to refinance the company’s existing debt obligations and fund business development opportunities, as well as other general purposes.
The bonds will be offered at face value from June 24 to July 3, 2024, in time for listing at the Philippine Dealing & Exchange Corp. on July 11, 2024, according to the latest timetable submitted to the SEC.
Megawide has engaged PNB Capital and Investment Corporations, RCBC Capital Corporation, and SB Capital Investment Corporation as joint issue managers, joint lead underwriters, and bookrunners for the offer.
The bonds have been assigned an Issue Credit Rating of PRS Aa, with a Stable Outlook, by Philippine Rating Services Corporation (PhilRatings).
PhilRatings also maintained its Issue Credit Rating of PRS Aa, with a Stable Outlook, for Megawide’s outstanding rated bonds of P4.0 billion.
Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment to the obligation is very strong.
A Stable Outlook, conversely, indicates that the assigned rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said the assigned ratings took into account Megawide’s solid experience in the construction industry, along with vertically integrated operations, that are seen to complement the government’s infrastructure projects.
Also factored in the rating are the firm’s notable expansion projects in recent years, which have been used to diversify into less cyclical sources of revenues and the favorable industry outlook and opportunities backed by the government’s infrastructure projects.
Also considered by PhilRatings is the rebound in Megawide’s earnings, albeit with easing margins attributed to a strategic approach and its improved leverage levels.
Megawide bounced back to profitability with a consolidated net income of P183.4 million in the first quarter of 2024 from the P7.4 million net loss in the same period last year.
The firm said its performance came at the heels of a 19 percent improvement in consolidated revenues to P5.2 billion, which carried over from 2023’s performance.
“The results of the first three months of the year reflect the impact of a normalizing operating environment, allowing our businesses to thrive,” said Megawide Chairman and CEO Edgar Saavedra.
He added “On the construction side, accomplishment levels in our existing order book generally remain on track with the schedule.
“Our real estate operations is slowly pitching in and will continue to see an increasing share of revenue down the road, together with our landport operations, as foot traffic continues to grow, and office occupancy starts to recover.
“All these factors are expected to contribute to a stronger 2024 and sustain the gains from the previous year.”