Property firm to do follow-on offering

REPORT FROM BUSINESSWORLD Listed EIB Realty Developers, Inc. will raise P5 billion between next month and September through a follow-on offering after it secures the nod of the Securities and Exchange Commission (SEC) on the amendments to its articles of incorporation, Chairman and acting President Jaime C. Gonzales said Monday. In a talk with reporters, Mr. Gonzales said the move would allow the firm to erase its deficit. As the follow-on offering may give way to a new controlling group and dilute existing common stockholders of the company, EIB Realty will change its name. "When we do the follow-on offering, the deficit will be completely wiped out," he told reporters after the company’s special stockholders’ meeting. "The market will see this company to be debt-free. At that point, I am hoping we would have already acquired one or two buildings generating cash flows and profits while the company will have income producing properties." EIB Realty is engaged in real estate development and property management. While the reactivation of its operations has been kept on hold since 2004 due to the major reorganization of its parent company, Export and Industry Bank, Inc. (Exportbank), EIB Realty continues to engage in the property development business by way of its existing flagship project — the One Mckinley Place Condominium. In a filing, EIB Realty said medium to long-term plans include the entry of potential investors through financing, property swaps or such other funding mechanisms to meet the mobilization fund required for its re-entry into the industry and for additional working capital. It is also looking into acquisition of properties that will complement its overall growth strategy."This has proved to be timely with the favorable economic environment setting the backdrop for EIB Realty to pursue its new direction. More specifically, the high growth sectors of commercial real property rentals and development and business process outsourcing are providing bright prospects for a near-term turnaround," it said. Shareholders’ okay On Monday, stockholders representing over 67% of all its issued and outstanding common shares approved the reduction in the firm’s par value of its common shares to P0.18 from P1 with the corresponding decrease in authorized capital stock to P246.26 million from P2 billion. This will be divided into 1.37 billion common shares from two billion common shares. EIB Realty will increase its authorized capital stock to P9 billion divided into 50 billion common shares at a par value of P0.18. The number of shares to be issued through a public offering, out of the proposed increase in its authorized capital stock, will consist of not more than 27.78 billion common shares at the new par value of P0.18 per share amounting to P5 billion. Mr. Gonzales said local and foreign investors have been identified that will participate in the follow-on offering. EIB Realty intends to develop its existing land bank, purchase buildings, acquire and develop through joint venture prime projects in Makati, Fort Bonifacio, and Ortigas, buy properties from special purpose vehicles (SPVs) and develop through joint venture basis, sell a portion of completed building to capture investment income and lease out remaining units for steady rental income. — Ruby Anne M. Rubio/BusinessWorld