The deal will help reduce Megawide’s debt while giving it a roughly 13 percent stake in its fast-growing energy affiliate Citicore Renewable Energy Corp. (CREC).
Megawide will receive P3.5 billion in cash, while the remaining P5.9 billion will be paid through shares in CREC, the construction and engineering giant said in a stock exchange filing on Thursday.
Management’s view
“The cash inflow will be used directly to pay down a portion of our outstanding debt, while the ownership of CREC shares will offer immediate earnings accretion and serve as currency for future value realization,” said Megawide chairman and CEO Edgar Saavedra.
“We are very excited for this pivotal shift as we strategically rebuild and recreate shareholder value of Megawide,” he added.
Of the total, P4.69 billion comes from Citicore Holdings and P4.73 billion from Citicore Power, including principal and interest.
Based on recent trading averages, the share transfer covers about 1.47 billion shares, equal to roughly 13 percent of CREC, with final terms subject to approvals and market checks.
New earning streams from power
“From the early capital we infused in the platform, it has already produced two publicly listed entities, currently having a combined market capitalization of approximately P37 billion – attributable to our respective shares in both companies – and with very strong growth prospects,” Saavedra said.
“Management deems it appropriate to already close out the advances and allow us to focus on Megawide’s growth agenda anchored on construction, real estate, and infrastructure,” he added.
—Edited by Miguel R. Camus
