Cemex Homdings Philippines, Inc. (CHP) is looking to seal shareholder approval to add authorized capital stock next month along with its target to raise up to $250 million funds through a stock rights offering. The firm disclosed that it will hold a special meeting of stockholders this coming October 16 to get the approval for the increase of capital stock. CHP looks forward to increase its capital stock from P5.195 billion to P18.310 billion with 18.310 billion of shares at P1 par value. Here are some of the useful information about this news.
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Companies increase their capital stocks for many reasons. As for CHP, this capital hike will permit the company to conduct stock rights offering up to $250 million, which is in line with its preliminary target. The proceeds from this transaction will be used to finance the expansion of Solid Cement Plant located in Antipolo, Rizal—one of its own plants, to give flexibility to its balance sheet and to improve its capital structure. CHP is already operating at high utilization levels and the expansion of its Solid Cement Plant is essential to maintain its position in the market and continue to take advantage of the long-term demand here in the Philippines.
The company disclosed its expenditure for Solid Cement Plant as well. Accordingly, it will spend about $235 million to improve the capacity of the plant by 1.5 million metric tons (MT) from its current capacity of 1.9 million MT. If this is achieved, the capacity of the company will hike by 26%. The start of the operation for the new production line is expected to happen by the fourth quarter of 2020 and the products will be offered in the National Capital Region and Southern Luzon area. The firm expects the Solid Cement Plant to be free-cash-flow during the second half of 2021.
The firm emphasized that the proposed right offering would be transparent, fair, and equitable to all of its shareholders. The necessary approvals from the Securities and Exchange Commission and Philippine Stock Exchange will be secured as well. During the first half of 2019, CHP swung back to its profitability with an attributable profit of P802.32 million from its P584.71 million attributable loss last year during the same period. Gross revenues also took a jump to P12.356 billion, making it 4% higher year on year.