Megawide to receive P9.4 billion as settlement of advances

MANILA, Philippines — Engineering and infrastructure company Megawide Construction Corp. is beefing up its cash position, with the company set to receive P9.4 billion from parent Citicore Holdings Investment Inc. (CHII) and sister company Citicore Power Inc. (CPI) as settlement of advances.

In a stock exchange filing, Megawide said it signed separate agreements to settle advances due from CHII and CPI.

Of the total P9.4 billion, P4.69 billion is due from CHII, while the remaining P4.73 billion is from CPI.

“The cash inflow will be used directly to pay down a portion of our outstanding debt, while the ownership of Citicore Renewable Energy Corp. (CREC) shares will offer immediate earnings accretion and serve as currency for future value realization,” Megawide chairman and CEO Edgar Saavedra said.

Megawide said the transaction would have two components based on the signed agreements.

The components include the upfront payment of cash amounting to P3.5 billion and the balance of P5.9 billion via the assignment of CREC shares to Megawide.

The assignment involves approximately 1.47 billion shares and around 13 percent stake in CREC.

However, Megawide said the final share price and the final number of shares to be involved would be agreed upon by both parties and subject to validation of external independent parties, regulatory approvals and reasonable market movements.

Saavedra said the transaction is a good timing as the group’s investment in the power business is starting to bear fruit.

“From the early capital we infused in the platform, it has already produced two publicly listed entities, currently having a combined market capitalization of approximately P37 billion – attributable to our respective shares in both companies – and with very strong growth prospects,” Saavedra said.

“Management deems it appropriate to close out the advances and allow us to focus on Megawide’s growth agenda anchored on construction, real estate and infrastructure,” he said.

To complement the financial management program, Saavedra said Megawide is finalizing several initiatives as well as negotiating critical projects that will provide the company with sustainable income streams in the years ahead.

“We are very excited for this pivotal shift as we strategically rebuild and recreate the shareholder value of Megawide,” he said.