Wednesday, November 25, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
Sy-led SM Development Corp. is hoping to raise as much as P4.8 billion in fresh capital through the sale of new shares to existing stockholders next year.
The property firm told the stock exchange yesterday 1.37 billion common shares would be sold in a stock rights offering at P3.50 per share, 13.25% cheaper than the 15-day volume-weighted average price of SM Development shares from Oct. 30 to Nov. 20. It is also lower than the P4.25 apiece market price yesterday.
The rights offering will start on Jan. 4, covering shareholders as of Dec. 7. Existing shareholders may avail themselves of one share for every three held.
The company said the proceeds would be used to finance various residential projects.
SM Development is preparing a P10.4-billion budget next year, up from the P7 billion spent this year. A total fo P5.7 billion will be used for “landbanking activities.”
The property company said it would expand its business by adding four new buildings to its existing residential projects, and by launching seven new projects to be undertaken in nine phases. The sale of condominium units could raise P14.55 billion in reservation sales.
SM Development said it expects to more than double its reservation sales next year to P15.69 billion from a projected P8.8 billion projected reservation sales this year. This will boost net income to P3.06 billion next year from a projected P1.87 billion by yearend.
As of September, the company has already posted profits of P1.4 billion, from just P23 million in the same period last year. This was mainly due to strong market reception of its residential projects and higher completion rates of various projects, the firm said. The marked recovery in the financial markets also benefited the company’s investment assets.
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