City & Land to issue P1.5-B STCPs

City and Land Developers Inc. is seeking the approval of the Securities and Exchange Commission to issue P1.5-billion worth of short-term commercial papers (STCPs) to pay off maturing obligations and finance the development of its condominium project in Manila.

This marks the company’s first issuance of STCPs under the Securities Regulation Code.

In its registration statement filed with the SEC, Cityland said the STCPs will be issued to the general public and institutional buyers. The IOUs will be issued in three tranches with P800 million to be released in the first tranche, and P450 million each for the second and third tranches.

Cityland said the bulk or P1.2 billion of the proceeds will be used to cover maturing loans. Another P250 million will be used to finance the completion of Cityland Vito Cruz Towers 1 and 2 while the remaining P50 million will be used for operating expenses.

The STCPs will be secured by a committed credit line to be issued by a reputable universal or commercial bank to the extent of 20 percent of the STCPs approved by the SEC.

Should the company obtain less than the maximum proceeds, it will just opt to renew all the maturing obligations from the existing financial institutions that extended loans or tap existing lines with the banks.

Amid the weak economic environment, Cityland reported a 35-percent growth in its net income last year from P127.43 million to P172.42 million. Revenues amounted to P467.34 million or 20.17 percent higher than the P388.89 million registered in 2001. Sales of Vito Cruz Tower I contributed 48.53 percent to annual sales in 2002 and its completion rate reached 22 percent.

The real estate industry is still experiencing the effects of the economic slowdown brought about by the Asian financial crisis and by the Sept. 11, 2001 event. The industry slump has forced some developers to scale down their operations while others discontinued their developments entirely.

The company believes that it is in a better position to cope with the competition because historically it has been developing and selling horizontal and vertical projects at affordable projects.