The Philippine Stock Exchange approved Wednesday Coal Asia Holdings’ application for an initial public offering of 800 million shares.
The 800 million shares represent 20 percent of the company’s total issued capital stock and will be offered at par value of P1 to attract retail investors.
Coal Asia, the holder of the country’s second-largest coal reserves, earlier received the nod from the Securities and Exchange Commission for the planned IPO that aims to raise P726 million net of IPO expenses.
The company plans to use the proceeds to bring the Davao Oriental and Zamboanga-Sibugay coal mines into commercial production by 2014 and 2015, respectively.
Coal Asia produces high grade coal of less than 100,000 metric tons a year but expects to increase production to 600,000 MT by 2014.
The company projected net income to reach P500 million by 2014. It said it was at the right place and at the right time to become a threat in the future to industry leader Semirara Mining Corp.
It cited the Department of Energy’s 2009 to 2030 Philippine Energy Plan, which showed some 16,550 megawatts of additional power capacity would be needed between now and 2030. The country’s installed generating capacity is currently only slightly over 15,000 MW.
The bulk of the capacity is needed by Luzon at 11,900 MW, followed by Mindanao at 2,500 MW and Visayas at 2,150 MW.
It said over 3,000 MW of coal projects in the pipeline would need a secure source of fuel supply.
Coal Asia said it drew interest from potential strategic and financial investors from the power generation and cement industries to help ensure steady supply of coal and possibly hedge against another significant runup in coal prices given the energy crisis in Mindanao.
The company’s coal assets amount to P12.5 billion based on a valuation report by Multinational Investment Bancorporation.
Coal Asia has already bagged off-take contracts both here and abroad but is also eyeing the export markets including India, Japan, Taiwan, Hong Kong and Vietnam.
The company is also looking to supply steam-grade coal to cement plants, canneries and manufacturing plants that have converted their diesel-powered plants into coal-powered plants to reduce costs. source
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