In a disclosure to the Philippine Stock Exchange, Megaworld said the offer price represents a 15.14-percent discount to the 10-day volume weighted average price from Nov. 23 to Dec. 7, 2006 of P2.1565 per share.
Megaworld closed at P2.22 per share yesterday.
Under the pre-emptive rights offer; shareholders can buy two shares for every five shares held as of Dec. 15.
The company originally planned to offer shareholders just one share for every two existing common shares. But the company revised the terms upon consultations with local and foreign shareholders who felt that the original terms were disadvantageous to them.
The rights shares will come partly from the company’s unissued authorized capital stock and its P10-billion increase in capitalization. Megaworld expects its net profit to increase by at least 50 percent next year upon completion of its stock rights issue.
Megaworld’s share price has risen by nearly 100 percent since the start of the year, reflecting the strong investor confidence in the company’s stock. It, however, fell to as low as P1.90 on fears that the stock rights offer would have a dilutive effect.
Bulk of the sales proceeds or P4 billion will go to the development of the hotel, retail and office components of Cityplace, Megaworld’s first project in Manila’s Chinatown district.
About P3 billion has been earmarked for landbanking activities, P2 billion for working capital requirements and the remaining P1 billion for the continued expansion of its business process outsourcing office space in Eastwood, Libis in Quezon City.
The company is building E-Commerce Plaza within Eastwood to meet the growing demand for BPO space.
Megaworld chairman and president Andrew Tan views the stock rights offer as an "opportune undertaking that will help Megaworld to maintain a leadership position in two robust segments of the property market: residential condominium and business process outsourcing."
The company expects its net profit to grow 66 percent this year to P1.9 billion from only P1.17 billion a year earlier, driven by the strong performance of its residential condominium and office building projects.
For the period January to September this year, Megaworld’s net profit amounted to P1.5 billion or an increase of 92 percent from the previous level.
Revenues jumped 62 percent to P6.4 billion, mainly driven by strong real estate sales of residential condominium projects in its large-scale developments such as McKinley Hill and Forbes Town Center in Fort Bonifacio, Taguig City, and Eastwood City in Quezon City.