ChemrezTech chief finance officer Francis Caluag said the offer price is at the middle of the company’s earlier defined price range of P3.90 to P4.90. The offering involves 340.91 million shares, representing 24.4 percent of the biodiesel firm’s outstanding capital after the stock sale.
Caluag said the offer price is equivalent to 11.5 times the company’s earnings per share and translates to a 12.58-percent discount to the weighted average price of ChemTech shares over the last 10 trading days.
Analysts said the discount to market average is the biggest discount so far given by firms that recently offered shares to the public, whether maiden offerings or additional stock sales.
The offering will run from Nov. 20 to 24 while listing of the shares has been set on Dec. 4.
Net proceeds from the offering, amounting to P1.43 billion will be used to retire the company’s obligations to parent company D&L Industries for the acquisition of its biodiesel project, to retire bank loans and to partially finance its working capital requirements.
ChemTech used to be known as powder coating firm Corro-Coat before it acquired its much bigger affiliate Chemrez Inc., which manufactures resins and oleo-chemicals, including international-grade coco-biodiesel under the BioActiv brand.
The company exports its premium coco-biodiesel BioActiv to rapidly expanding export markets such as Europe and Japan, which are seeking alternatives to petro-diesel but have limited capacity to produce crops for the manufacture of biodiesel.
The domestic demand for coco-biodiesel is estimated at 70 million liters a year based on the seven billion liters of petrodiesel consumed by the country last year. The figure is seen to more than double to 160 million liters if the biofuel bill is enacted into law since it mandates a one percent blend of biodiesel for all petrodiesel sold in the country and up to a two-percent blend two years after the law’s implementation.
ChemTech is seen to post a net income of P131.62 million this year and P536.67 million in 2007 on revenues of P2.67 billion in 2006 and P4.72 billion next year.
The increase in sales and earnings will be due to the consolidation of earnings from powder coating, resins and oleo-chemicals as well as the full operation of the new biodiesel plant.