Cirtek gets go-signal for P2.88-B follow-on offering

MANILA, Philippines - The Philippine Stock Exchange (PSE) has approved the P2.88 billion follow-on offering of Cirtek Holdings Philippines Corp., a Laguna-based manufacturer of integrated technology products.

A follow-on offering is a share issuance subsequent to a company’s initial public offering (IPO).

Cirtek said proceeds from the offer would be used for general funding needs as the company seeks to expand its business portfolio through the development of its own products and brands, with a focus on high-growth industry segments such as wireless communication and mobile devices and applications, and online and mobile solutions such as e-commerce.

“The company intends to use the net proceeds from the offer for strategic acquisitions, capital expenditures, payment of financial obligations and working capital requirements of the company,” Cirtek said.

In its registration statement for the follow-on offering, Cirtek said based on its maximum offer price of P24 per offer share, the company expects to raise gross proceeds amounting to approximately P1.9 billion for an offering of 80 million shares.

The offering has an over-subscription option of 40 million shares at P24 per share for total subscription worth P2.88 billion.

Of the P1.9 billion estimated proceeds, the company will allot P630.7 million to fund strategic acquisition, P631.9 million for capital expenditures, P278.2 million to settle its financial obligations and P314 million for its working capital requirements.

The offer period is set on Oct. 23 to Oct. 30. The company tapped First Metro Investment Corp. and SB Capital Investment Corp. as joint lead underwriters.

Cirtek reported a net income of $3 million in the first six months this year, higher compared to $2.1 million in the same period last year.

Consolidated net sales for the first half amounted to $28.3 million from $22.8 million in the same period a year ago.

The growth was accounted for by sales from its business of radio frequency, microwave and millimeter wave.

Sales to Cirtek’s top 10 customers rose 24 percent in the first half of the year compared to the same period in 2014.

In terms of revenue by application, the company estimates at least 50 percent of its output for the period went to communication, 20 percent to consumer electronics, 10 percent to computing, 10 percent to industrial and 10 percent to automotive.

“Cirtek continued to focus on process and materials engineering activities in order to create innovative and cost-effective solutions to customers,” it said in its report.

In the Philippines, the company is a pioneer in the gallium nitride (GaN) wafter technology that is used in various applications such as telecom, WiFi, data, network, satcom, broadband, and consumer RF applications.

GaN technology refers to the use of gallium nitride as a semiconductor material that offers high level of mechanical stability, hardness, heat capacity and thermal conductivity, and very low sensitivity to ionizing radiation, thereby permitting devices to operate at much higher voltages, frequencies and temperature.

Through its subsidiary Cirtek Advanced Technology and Solutions (CATS), the company continues to maintain its position as the leading global supplier of millimeter wave products.

The global semiconductor industry is forecast to grow between five and eight percent this year, to be driven largely by the iPhone supply chain and automotive market. Sales of android phones, tablets, PCs and TVs are also expected to increase.