Chemrez eyes P1.5B from sale of additional shares

Chemrez Technologies (formerly Corro-Coat Inc.) plans to list additional shares on the local bourse by Nov. 20 to raise about P1.5 billion in fresh capital.

ChemTech is offering between 306.12 million and 384.62 million new shares, equivalent to 22.46 percent to 26.68 percent of the biofuel and chemical firm’s expanded capital. The shares will be sold at a price ranging from P3.90 to P4.90 per share.

Aside from the shares to be offered to the public, ChemTech will issue 462.23 million shares to shareholders of its affiliate Chemrez Inc. which it is acquiring via a share swap to directly get into the biofuel and chemicals business.

Asian Alliance Investment Corp. will serve as lead underwriter and issue manager.

Net proceeds from the offering, amounting to around P1.43 billion, will be used to settle bank loans and prospective obligations to D&L Industries worth P667 million, to be incurred in connection with the acquisition of the biodiesel plant.

The acquisition of the plant is in line with ChemTech’s bid to become a biodiesel powerhouse and take advantage of the increasing demand for biodiesel abroad and locally.

ChemTech is looking at a 38 percent increase in its net profit this year to P131.62 million from only P95.54 million in 2005, mainly due to the consolidation of earnings from powder coating, resins and oleo-chemicals as well as the full operation of its new biodiesel plant.

Revenues are likewise seen to grow to P2.67 billion from P2.37 billion last year.

For 2007, net profit is projected to increase further to P536.67 million while revenues are seen to rise to P4.72 billion.

The biodiesel business is expected to be a major revenue driver and profit generator for ChemTech as it is expected to account for half of its sales and over two-thirds of its profits by next year on the back of anticipated strong demand for alternative fuel in the domestic and export markets.

Chemrez Inc. manufactures resins and oleo-chemicals, including international-grade biodiesel under the BioActiv brand.