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Property developer defers fund raising

Posted on June 23, 2013 09:44:54 PM [ BusinessWorld Online ]
LISTED PROPERTY DEVELOPER Sta. Lucia Land, Inc. has moved its multibillion-peso fund-raising exercise -- possibly to 2014 from later this year -- due to prevailing unfavorable market conditions, a senior company official said on Friday last week.
Sta. Lucia Land on Friday bagged the approval of its shareholders to raise P3 billion from a follow-on offering and P6 billion from the issuance of dollar-denominated bonds. 
“The timetable, now that the market behaved as it did -- maybe next year,” David M. Dela Cruz, the firm’s executive vice-president, told reporters following the company’s annual stockholders’ meeting in Rizal. 
“We were planning it late this year,” he added. 
“We will go only if market conditions permit. We might do either. We might do one. We might do both. We might do one after the other. We still don’t know yet.” 
The stock market has seen intermittent drops lately, largely in step with counterparts worldwide, ever since officials of the US Federal Reserve began hinting late in May of the need to scale back their massive bond-buying stimulus. Last Wednesday, Fed Chairman Ben Bernanke said in a news conference after a policy meeting that day that the US economy has been recovering fast enough to warrant a reduction in bond-buying within the year and a possible end by the middle of 2014. 
While markets worldwide have been bearish since May, when Fed officials started dropping hints of a gradual withdrawal of stimulus, Mr. Bernanke’s more specific timetable last Wednesday weighed further on trading. 
At home, the Philippine Stock Exchange index closed at 6,182.17 last Friday, down 2.28% from the previous day though still 6.36% up from its end-2012 closing of 5,812.73. The main index has closed at 31 record highs since the year began, the last one at 7,392.20 on May 15.
Mr. Dela Cruz said the company needs P4.1-4.3 billion to “fast-track existing projects and acquire land bank.” The company, he added, has as many as 25 ongoing projects -- bulk of which are residential -- located all over the country. 
In the meantime, the company has been in talks with banks to fund capital requirements. 
“We are currently opening up lines with banks. We have current dealings with BDO [Unibank], China Bank, BPI (Bank of the Philippine Islands) and Malayan Bank,” he said. 
“But I think we want to increase the lines with banks.” 
Last Friday, the company also informed its shareholders about a planned P1-billion buyback program to support value of the company’s shares amid the market’s fall. “We want to maintain the company at its fair value,” he said. “If the market dips further, we will do the buyback.” 
The company, he said, is looking to spend P8-10 billion in the next two years “depending on availability of funds.” In the last five months, the company has so far spent “around P2 billion for new and existing projects,” he said. 
Net income of Sta. Lucia Land grew by 4.16% to P40.04 million in the first quarter from P38.44 million in the same three months last year on higher real estate sales. 
Shares of Sta. Lucia Land lost four centavos or 6.06% to 62 centavos on Friday last week from 66 centavos last Thursday. -- C. H. C. Venzon
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