Philex shelves P13.8-B rights offer
MANILA, Philippines – Listed miner Philex Mining Corporation has shelved its planned P13.8-billion stock rights offering, citing unfavorable market conditions.
In a disclosure to the stock exchange on Tuesday, October 8, Philex said it considered low commodity prices and the current volatility in the equities market in its decision not to proceed with the rights offer.
"The stock rights, if launched, would have been priced at no more than P5 per share with a 1/3 dilutive effect on the current shareholders," it explained.
Philex planned to use part of the funds to repay advances from the US$150-million credit facility extended by its parent firm, First Pacific Group.
Philex has already withdrawn $130 million from the credit facility.
Since First Pacific agreed to extend access to the facility until March 2014, the Philex said it could use the remaining $20 million for its Silangan project in Surigao.
This will help ease pressure on Philex to raise funds outside its cash flows, it said. This, in turn, will allow the company to use its existing cash flows to fund the rehabilitation of its compromised copper-gold mine in Padcal, Benguet province.
"In addition, the company would be in a position to declare dividends to its shareholders should the board of directors deem it appropriate to do so and at the same time pursue to completion of the feasibility study for the Silangan Project," said the company.
The Silangan project, which is likely to begin operations in 2017, will provide a vital revenue stream for Philex, especially when the life of the Padcal mine ends in 2020.
"The company will revisit its fund raising exercise at the end of 2014. By that time, the feasibility study for the Silangan project would be close to completion at which point the company's long-term funding requirement would have been defined," the company said. – Rappler.com