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SEC approves P13-billion follow-on offering of developer 8990 Holdings

The Securities and Exchange Commission (SEC) has approved the planned P13.14 billion follow-on offering (FOO) of housing firm 8990 Holdings Inc., formerly IP Converge Data Center.

SEC documents show, the firm plans to sell 517 new common shares while its shareholders are planning to sell 382.36 million 8990 shares that they own at a maximum offer price of P12.70 per share. Shareholders have also set aside 134.95 million more shares for sale under an overallotment option.

The firm estimates that net proceeds from the primary offer will reach P6.35 billion while its shareholders Luis Yu Jr., Mariano Martinez Jr. and Jesus Atencio will earn P4.67 billion. The overallotment option will generate an additional P1.7 billion for the selling shareholders.

The FOO is slated to start on January 30, 2014 up to February 14, 2014 while the shares will be listed at the Philippine Stock Exchange on February 21, 2014 with “HOUSE” as the stock symbol.

Proceeds from the primary offer will be used to acquire a 13-hectare property in Ortigas Avenue Extension, Pasig City (P2.4 billion) and a 30-hectare lot in Davao City (P100 million).

The firm is setting aside P2.5 billion of the proceeds for its working capital requirements and P1.4 billion has been earmarked for general corporate purposes.

SB Capital Investment Corporation is the lead manager for the follow-on offering.

The 8990 Group has projects all over the country including the Deca Wake Board Park in Angeles and Davao Cities, and is targeting the purchase of new properties for development in NCR, Cavite, Cebu, Davao and Iloilo totaling at least 200 hectares.

The firm reported that its earnings jumped 64 percent to breach the P2 billion level in the first nine months of 2013 as robust demand for low-cost houses resulted in strong sales.

In a statement, 8990 said its net income amounted to P2.1 billion from January to September 2013 compared to the P1.28 billion profit booked in the same period of 2012.

The company expected its net income to exceed P2 billion in 2013 from P1.71 billion in 2012 due to continuous brisk demand from the affordable mass housing sector particularly in the Visayas and Mindanao.

“Internally, we attribute our growth to the growing recognition of our brand – DECA HOMES, our proprietary pre-fab technology that allows us to turnover housing units in less than a month, as well as our unique in-house financing program that allows our buyers to move in as soon as their units are completely built,” explained 8990 Holdings President Jesus Atencio.

He added that, “on the macro-side, positive GDP growth, stable OFW remittances, and a widening gap of demand and supply for mass housing resulting in a housing backlog of 4 million units provides a platform for long term growth in the mass housing sector.”