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Construction firm beefing up capex to P2B

Posted on 09:21 PM, December 19, 2010 [ BusinessWorld Online ]
MEGAWIDE Construction Corp., which claims to be the largest local contractor, will more than double its capital spending to P2 billion in 2011 to purchase new equipment for its projects, specifically for listed SM Development Corp.
The company wants to conduct its P2.29-billion initial public offering (IPO) in January or February next year, officials said late last week.
“Megawide Construction will spend P2.02 billion in capital expenditures for 2011, up P1.22 billion or 153% from P800 million in 2010,” the company said in a statement yesterday.
The capital hike “will be sourced from internally generated cash as well as from proceeds from an expected initial public offering next year,” said Oliver Y. Tan, chief investment strategist of Megawide Construction.
Higher capital next year will allow the company “to cope with expected increase in construction activities from both private and public sectors,” it added.
In particular, the contractor will buy new equipment like the Automatic Climbing System -- which can cut construction time for high-rise buildings by 20% and increase capacity by 35% -- Liebherr Cranes from Germany, and earth moving equipment.
As of end-September, Megawide Construction has spent P591 million, the bulk of which was accounted for by the acquisition of pre-cast and formworks systems as well as heavy equipment from Germany.
The 2011 capital allotment also covers new formwork systems from Europe and preliminary construction of a P1-billion pre-cast concrete manufacturing plant in the municipality of Taytay in Rizal.
Michael C. Cosiquien, chairman and chief executive of Megawide Construction, told reporters the company will list in the local bourse in January or February.
“The IPO will expand our investor and client base,” Mr. Cosiquien added.
The contractor wants to sell up to 292 million new common shares or approximately 34% of the issued and outstanding capital stock of the company.
Megawide Construction wants to grow its business outside SM Development, which awarded three new projects to the company in the fourth quarter.
Around 70% of SM Development’s residential condominium projects are being built by the construction firm.
Megawide Construction wants to generate P200 billion in revenues in the next decade from one million socialized housing units.
The company expects to double this year’s revenues from P2 billion last year, which went up from P1 billion in 2008 and P241 million in 2007.
Megawide Construction started operations just before the Asian financial crisis in 1997 with a P5.5-million, three-storey building as its first project.
To date, the construction company has 10 high-rise buildings worth more than P25 billion under construction. -- Neil Jerome C. Morales
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