Citicore Renewable Energy [CREC 3.47, up 1.2%; 7% avgVol] [link] clarified a recent report on its increase in capex for FY25, confirming the base thesis of the article that CREC “will likely have an increase in [capex] for 2025”, but adding that the “shelf registration” mentioned in the article for future fundraising is actually a “possible bond issuance with shelf registration.” CREC spent P35 billion in FY24, and has plans to raise funds using both debt and equity in H1/25.
MB bottom-line: I think “shelf registration” is one of those terms that is used more often than it is understood. There can be a lot of nuance when you get down into the nitty-gritty of it, but zoomed out, a “bond shelf registration” is a way of getting pre-clearance for future sales. For example, if a company needs P20 billion to develop a project, it can go through the non-trivial process to get a P20 billion bond issuance approved by the SEC, sell the bonds, use the cash to develop the project, and then service the bonds with interest payments. But what if a company has several projects over the next 12 to 18 months that require a total of P60 billion? If it went through the process to get a P60 billion bond issuance approved by the SEC and sold that issuance all at once, it could maybe use P20 billion to develop the first project, but it’s stuck paying interest on the whole P60 billion in debt when it only needed P20 now and maybe P20 billion in 8 months and another P20 billion 16 months from now. Instead of treating those three needs as separate things, a “bond shelf registration” allows a company to seek SEC approval for the whole amount, say P60 billion, and then to sell that entire amount in smaller batches (as it sees fit) over the course of the next three years. That allows the company to only increase its indebtedness on an as-needed basis, and it saves everyone (company, advisors, SEC) time by allowing the company to pre-clear the fundamentals of those subsequent offerings. See? “Shelf registration” sounds like something that should be way more interesting, but (alas) it is not. But if you didn’t know before, now you know, and that’s something!
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