Cemex Holdings Philippines Inc. plans to raise as much as $250 million through a share sale to finance plant expansion.
The cement company said in a disclosure to the stock exchange its board approved the increase in the company’s capital stock to P18.31 billion from P5.195 billion to support the planned capital raising activity.
The planned capital hike will be subject to shareholders’ approval during the company’s annual meeting slated in June.
“The rationale for the amendment is for the ability to raise equity capital including, but not limited to, a rights offering, that the corporation may undertake, subject to the final decision and approval of the board of directors,” CHP said.
“The corporation is potentially looking to raise up to US$250 million which would allow it to improve its capital structure, fully fund the ongoing Solid Cement plant expansion and provide balance sheet flexibility,” it added.
The $235-million expansion plan involves the construction of an additional cement line in Antipolo, Rizal that is capable of producing 1.5 million metric tons annually. The expansion is expected to increase CHP’s cement capacity by 26 percent.
Solid Cement, one of CHP’s main subsidiaries, signed in October the procurement, construction, and installation agreement with CBMI Construction Co. Ltd of China for the company’s new cement production line scheduled to start operations in the fourth quarter of 2020.
Solid Cement in November secured a $75-million loan facility from Cemex Asia B.V. It also made an initial drawdown on the facility equivalent to approximately $40.7 million.
Solid Cement is producing 1.9 million metric tons of cement and is serving the markets of southern Luzon and the National Capital Region.
CHP in 2018 reported a net loss of P930 million, a sharp reversal from an income of P659 million in the previous year, due to higher income tax expenses, lower operating profit and higher foreign exchange losses.
Net sales increased six percent to P23.4 billion in 2018 from P21.78 billion recorded in 2017 as cement volume rose seven percent, driven by the healthy demand from both the private and public sectors.