Vol. XXII, No. 80 [ BusinessWorld Online ]
Friday, November 14, 2008 | MANILA, PHILIPPINES
PROPERTY DEVELOPER Megaworld Corp. will borrow money from big investors to finance projects and possible acquisitions amid an ongoing financial crisis in the US and a global economic downturn.
In a disclosure yesterday, the Andrew Tan-led company said its board of directors had authorized the issuance of up to P5 billion worth of unsecured corporate notes.
Megaworld said proceeds of the bonds, which will be issued to 19 big investors and in one or more tranches, would be used for general corporate purposes.
Property analysts earlier said real estate companies should tap other markets and exercise caution in their selling strategies to protect themselves from the crisis.
Realty firms have been urged to target the low-cost market and avoid depending on preselling and instead finish a certain project first before marketing it to clients.
Megaworld has tapped Banco de Oro (BDO) Capital and Investment Corp. as the issue manager.
Megaworld Executive Director Kingson U. Sian said details of the bond issue were still being threshed out. The realty firm said the amount and maturity of the bonds under each tranche would depend on market demand.
The interest rate will be computed using an applicable benchmark rate yet to be determined by the company and BDO. "The final terms of the notes [will] be agreed upon by and between Megaworld and BDO," the company said.
Net profits of Megaworld went up by more than a quarter to P1.07 billion in July to September from a year earlier, the second time in its history to breach the P1-billion mark. This brought nine-month profits to P2.86 billion.
The company said it was on track to meet its full-year net profit target of P3.8 billion, almost four times higher than last year.
Meanwhile, profits of Megaworld sister Empire East Land Holdings, Inc. were flat at P141.3 million in January to September. Company officials declined to disclose third-quarter figures.
Reservation sales of the company’s preselling and ongoing projects reached P2.1 billion during the nine-month period. It said almost two-thirds of units in Pioneer Woodlands’ first tower in Mandaluyong City have been sold while a quarter of the first tower of San Lorenzo Place in Makati has been reserved.
Empire East Land Holdings, Inc. develops and markets low-cost housing units
Shares of Megaworld slid by a centavo to 63 centavos, while Empire East was flat at 21 centavos apiece. — Kristine Jane R. Liu