MANILA, Philippines - Megawide Construction Corp. successfully raised P6.5 billion from the issuance of 10-year fixed rate corporate notes.
The company signed Friday a P6.5- billion notes facility agreement with the Philippine National Bank (PNB) and some other lenders.
Oliver Tan, chief finance officer at Megawide, said the issue was oversubscribed with orders hitting a total of P8.1 billion.
Proceeds from the notes issuance plus P2 billion in available equity will be used to fund the construction of more than 7,000 classrooms.
Megawide won two school infrastructure packages under the government’s public-private partnership project. Under the build-lease-transfer contract, the company will build 2,885 classrooms in Region III and 4,259 in Region IV-A.
The government will make annual lease payments of P522.98 million for Region III classrooms and P760.49 million for Region IV-A classrooms for the next 10 years.
Tan said construction of the classrooms would commence this month with the completion date targeted in February 2014.
Including the school projects, Megawide’s current border book is valued at approximately P26 billion as of September this year, Tan said.
This should translate to P16 billion in revenues in 2013, double its forecast for this year.
In terms of profit, Megawide expects to end next year with around P1.5 billion to P1.6 billion, 78 percent higher than the estimated P1 billion earnings this year.
“Our current order book are mostly office buildings and the schools, which have the fastest turnover compared with high-rise residential which normally takes three to four years to complete, the school project is like two to 2½ years,” Tan said.
To ensure continued growth, Tan said the company is looking to bid for in several other PPP projects like the NAIA expressway and the construction package for the Philippine Orthopedic Center. He said they are now in talks with prospective partners for these two large-scale infra projects.
Megawide, which is known for developing most of SM Development Corp.’s residential condominium projects, has been diversifying into other segments of the market to widen its investment portfolio.
Tan said the company remains optimistic on the residential segment of the market although it sees SMDC’s share to its total revenues go down to 45 to 50 percent from 73 percent.
“This year, we booked more office buildings and hotels than residential so that somehow softens any impact on the residential property and moving forward we are looking to book more on social infra like schools, hospitals... so that should somehow give us a more balance and diversified order book,” Tan pointed out.
Megawide recently bagged a P1.6-billion contract to build One World Hotel in Fort Bonifacio, owner of the H2O Hotel in Manila Ocean Park.
It also won the contract to build Filinvest Land’s iHUb Cebu worth an estimated P1.2 billion, marking the company’s first project outside Metro Manila. Construction is ongoing and completion is targeted in 2014.