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LOCAL
coal producer Sultan Mining & Energy Development Corp. (SMEDC)
has postponed its planned initial public offering (IPO)
to next month to give the company more time to complete
its first-half financial performance for presentation to
prospective investors.
In a
letter to the stock exchange, lead underwriter Asian
Alliance Investment Corp. said it recommended the delay
to the latter part of July.
“This
postponement will allow the company to present its
interim operating results as of the first half of 2008
to prospective investors,” it said.
While
there remains strong interest in the IPO despite weak
market conditions, investors are noticeably cautious and
have been staying in the sidelines. Thus, waiting for
the release of SMEDC’s first half results will address
these uncertainties and assure investors of the
company’s strong earnings capacity, the underwriter
said.
The
company is offering 480 million new common shares at par
value of P1 per share. The offer will be equivalent to
33.5 percent of outstanding capital.
The net
offer proceeds will be used by the coal and energy firm
to partially finance capital expenditures related to
additional exploration of its coal-operating contract (COC)
areas, improvements and expansion of coal extraction and
processing facilities, pay existing bank obligations,
and finance working capital requirements.
The
company is also looking at the possibility of putting up
a 300-megawatt coal-run power facility in Mindanao.
The
power facility can be supported by the vast potential
resource of its Daguma coal deposit, which is situated
between South Cotabato and Sultan Kudarat.
“That is
one of the options the company is looking at. Daguma is
seen to support a 300-MW power plant for 30 years,” the
source said.
SMEDC
has a 12.96-percent minority interest in the consortium
that is exploring the Daguma deposit. It is covered COC
134 issued by the Department of Energy in February 2006
with a maximum contract period of up to February 2041.
So far,
two blocks unearthed from the said deposit indicate a
coal resource of 211 million metric tons. Additional
drilling activities will be conducted to convert these
resources into reserves.
Meanwhile, the company is also in talks with three
foreign coal buyers for possible supply contracts as it
aims to start exporting within the year to take
advantage of higher prices overseas.
Sultan
Mining is also eyeing India as a possible export market
after it observed that coal prices continue to go up in
the global market as the price of crude oil rises.
However,
this does not mean the company will be neglecting the
local market.
Romina
Lu, chief operating officer, said the company plans to
follow the steps of top local coal producer Semirara
Coal Corp. that ships out only 25 percent to 30 percent
of output while reserving the bulk to supply local
buyers.
“It is
our commitment to prioritize the domestic market since
the country continues to import coal and this is putting
pressure on our foreign reserves and raising the trade
deficit,” she said. |
