Coal Asia sets sale of shares

MANILA, Philippines – Coal Asia Holdings Inc. will begin selling its shares to the public on Oct. 9 in a move that is seen to test investor appetite for maiden share sales after weak markets forced many investors to stay on the sidelines.

The company’s initial public offering will run until Oct. 15 while the listing of the shares was tentatively scheduled on Oct. 23.

Coal Asia, which has the potential to become the biggest producer of high-grade bituminous coal, will sell 800 million shares, equivalent to 20 percent of the company, for P1 each share. Upon listing, it will have a market capitalization of P4 billion.

Abacus Capital & Investment Corp. is the sole issue manager and underwriter for the offering.

Coal Asia Holdings is the parent company of Titan Mining and Energy Corp. (TMEC), which owns mining exploration and development rights in some 13,000 hectares in Davao Oriental and Zamboanga, Sibugay, which are believed to contain total potential coal resources of 120 million metric tons.

Net proceeds from the offering, amounting to P726 million, will be used to bring the company’s Davao Oriental and Zamboanga-Sibugay coal mines into commercial production by 2014 and 2015, respectively, to take advantage of the looming huge demand for coal.

Power firms are in a race to build new energy generating facilities in power-starved Mindanao as demand for power in the region is forecast to grow at an annual rate of 4.6 percent from 2011 to 2030.

Coal Asia currently produces high grade coal of less than 100,000 metric tons a year. It hopes to ramp up production to 600,000 MT annually beginning 2014.

The company is looking at a net income of P500 million by 2014 with the expected commercial operations of the Davao mine. Last year, it posted a net profit of P4.91 million, more than double the P2.03 million reported in 2010 on the back of a 63-percent jump in sales to P21.84 million.

Coal Asia has already bagged off-take contracts both here and abroad. It is looking to export to India, Japan, Taiwan, Hong Kong and Vietnam.