EEI Corp sets stock rights offer

Construction firm EEI Corp. is eyeing to raise around P500 million from a stock rights offering possibly in March this year to raise funds for working capital requirements and retire a portion of its bank debts.

A company official said the rights offering involves up to 220 million shares to be sold at a price yet to be set by EEI. Shares of EEI closed at P3.80 each yesterday.

The same official said P318 million of the sale proceeds will be used to settle outstanding loans from the Bank of the Philippine Islands (P175 million) and Malayan Colleges Inc. (P143 million).

About P164 million, on the other hand, will be used to fund ongoing projects such as the Rio Tuba 2 with JGC Corp., the Petro-FCC facility of Petron with Daelim Philippines, and the Shang Grand Tower with Kuok Properties.

EEI intends to fully repay these outstanding obligations plus accrued interest within 30 days after the listing of the shares, which has been set for April 2007.

As of end-September 2006, EEI had a total short-term debt of P1.815 billion and P119 million in long-term debt.

Based on its unaudited financial statements as of Sept. 30, 2006, EEI’s net tangible book value was at P1.42 billion or P1.55 per share.

The unaudited net tangible book value represents the amount of the company’s total assets less its total liabilities.

RCBC Capital Corp., a 99.91-percent subsidiary of the Yuchengco family’s Rizal Commercial Banking Corp., is the lead underwriter for the issue.

The Yuchengco family, through the YGC Group of Companies, is the majority shareholder of EEI.

EEI posted a net profit of P104 million in the first nine months of 2006 or more than four times the P22 million reported the previous level.

Consolidated revenues rose 22 percent to P3.75 billion from only P3.07 billion, largely due to the rise in construction contracts to P3.36 billion owing to strong domestic construction activities.

Sales likewise increased 76 percent to P85 million.

EEI president Roberto Castillo said healthy orders coming from domestic and foreign projects, spurred by the sustained recovery in the property development and industrial sectors, paved the way for the strong results of the company.

Castillo said the robust construction market in the Middle East and other countries also boosted EEI’s financial performance during the period under review.

As of end-September 2006, EEI had outstanding domestic projects worth P4.38 billion and another P7.22 billion in the pipeline in new contracts in Saudi Arabia.

Among its major ongoing projects include The Residences at Greenbelt and One Serendra of Ayala Land Inc., Philtown’s Fairways Tower and Kuok Properties’ Shang Grand Tower.

The company is also building various key infrastructure projects, such as the Iloilo Airport, the Subic Clark-Expressway, the elevated access road to NAIA-3 Terminal and several expansion packages for three stations of the LRT-1.

In addition, EEI is completing the electro-mechanical construction package for the two 110-megawatt coal-fired Mindanao power plants of Kawasaki Heavy Industries and the Northern Negros geothermal plant of the PNOC Energy Development Corp.

It recently completed the utilities expansion construction works for Sankyu Construction of Pilipinas Kao Corp. plant in Cagayan de Oro City.

Projects in the pipeline include a construction contract worth $114 million for Eastern Petrochemical for the new $2.5-billion Jubail Olefins complex in the Kingdom of Saudi Arabia.

The company is also involved in the $24.7 million Inco Goro nickel project in New Caledonia where it is undertaking piping, electro-mechanical and structural erection works.