MEGAWIDE CONSTRUCTION CORP. (Megawide) has signed agreements to recover P9.4 billion in outstanding advances from its parent Citicore Holdings Investment, Inc. (CHII) and sister company Citicore Power Inc. (CPI), with P3.5 billion to be settled in cash for debt repayment and the balance through a transfer of Citicore Renewable Energy Corp. (CREC) shares.
In a stock exchange disclosure on Thursday, Megawide said the remaining P5.9 billion will be covered through the assignment of a 13% stake in CREC.
“The cash inflow will be used directly to pay down a portion of our outstanding debt, while the ownership of CREC shares will offer immediate earnings accretion and serve as currency for future value realization,” Megawide Chairman and Chief Executive Officer Edgar Saavedra said.
Of the total advances, CHII accounted for P4.69 billion, while CPI accounted for P4.73 billion, inclusive of principal and interest.
The share transfer involves about 1.47 billion CREC shares, equivalent to a 13% stake, based on the initial valuation methodology using the 90-day volume-weighted average price of CREC shares as of the last trading day in August.
The final share price and number of shares will be determined by both parties, subject to validation by external independent parties, regulatory approvals, and reasonable market movements.
“From the early capital we infused in the platform, it has already produced two publicly listed entities, currently having a combined market capitalization of approximately P37 billion — attributable to our respective shares in both companies — and with very strong growth prospects,” Mr. Saavedra said.
The company said it found it appropriate to close out the advances and focus on its growth agenda, particularly in construction, real estate, and infrastructure.
“To complement this financial management program, we are finalizing several initiatives and negotiating critical projects that will provide us with sustainable income streams in the years ahead, that will further drive shareholder value,” Mr. Saavedra said.
Megawide’s attributable net income fell by 14% in the second quarter to P220.79 million due to lower revenues.
At the local bourse on Thursday, Megawide shares rose by 16.5% or 34 centavos to close at P2.40 apiece. — Beatriz Marie D. Cruz