Local mining firm gets SEC approval for IPO

MANILA, Philippines- The Securities and Exchange Commission has given the go signal for the P480-million initial public offering of Sultan Mining & Energy Development Corp., a local coal mining and trading company. Sultan Mining is offering 480 million new common shares at their par value of one peso per share to domestic investors. The offer shares will be equivalent to 33.5 percent of SMEDC’s outstanding capital after the IPO. In a statement, company vice chairman Rufino Bomasang said Sultan Mining is still keen on its plan to go public despite the downturns in stock markets here and abroad, because global investors continue to be bullish about prospects of coal stocks. Sultan Mining vice president for sales Michael Morales noted that share prices of coal companies overseas continue to outperform the global markets as the surging price of coal has outpaced crude oil and natural gas due to a spike in demand as global electricity demand grows. Bomasang said coal prices may even double this year as supply has been threatened by crippling China snowstorms, floods in mines in Queensland, Australia, slower growth in Indonesian output. In the domestic front, the Philippines continues to import huge amounts of coal to fuel its power plants because of inadequate local supply. To meet growing demand and take advantage of surging prices, SMEDC is ramping up production in its mine in Bislig, Surigao del Sur to at least 300,000 metric tons this year from less than 20,000 MT last year. The firm’s Bislig coal mine is now in full commercial production after Sultan Mining made fresh investments to bring in more heavy equipment so it can simultaneously develop and operate several open pits to dig up surface coal. Sultan Mining said production volume will steadily increase once additional open pits come on stream with the help of expansion efforts financed by fresh funds Sultan Mining will raise from its planned P480 million initial public offering. The coal company has tapped Asian Alliance Investment Corporation to be the lead underwriter for the IPO. SMEDC shareholder Maxinvent Trading Corporation has also granted Asian Alliance an option to purchase or place up to 48 million SMEDC shares, representing 10 percent of the offer for the purpose of covering over-allotments. Net offer proceeds will be used by the coal and energy firm to partially finance its capital expenditures related to additional exploration of its coal operating contract (COC) areas, improvements and expansion of coal extraction and processing facilities, to pay existing bank obligations and to finance working capital requirements. - GMANews.TV