Tarlac Electric seeks SEC approval for sale of shares
Tarlac Electric Inc. has filed its registration statement with the Securities and Exchange Commission (SEC) for the sale of 1.75 million common shares as its primary offer.
In its documents, the company said it will sell shares at an offer price of P345 apiece, for a total of P603.75 million.
The public offer is in line with its Tarlac Electric’s franchise, which requires the company to publicly offer 30 percent of its outstanding capital stock to Filipino citizens on or before the fifth year of its operations.
Net proceeds from the offer will be used to fund the company’s expansion projects, to retire maturing short-term debt or obligations, and to fund its general working capital.
Penta Capital and Investment Corp. has been chosen as sole underwriter for the deal.
The company is selling a minimum of 400 shares for individuals and 5,000 shares for corporations, associations, and partnerships.
Of the estimated net proceeds, P175 million will be booked as capital stock in the books of the corporation. The remainder shall be booked as additional paid-in capital.
Tarlac Electric said it will use about P150.93 million of the proceeds to construct its three-storey headquarters, P90.56 million each for the construction of its various network projects, to acquire and install network equipment and for its information technology and communications projects.
“Thus, in addition to the proceeds of the offer, the company also intends to secure long-term loans for additional funding for the projects above listed and other projects,” it said.
The company will also use the proceeds to pay some P97.6 million in debt with Development Bank of the Philippines that will mature early next year.
The company is consistently posting profits over the last few years since it has a natural monopoly of the market. It posted a profit of P212.34 million in 2017, P180.62 million in 2018 and P173.22 million last year. For the first six months of the year, it earned P68.53 million.
Formerly known as Tarlac Enterprises Inc., the company received its franchise to operate as a private electric distribution utility serving the electric power requirements of the Municipality of Tarlac, now the City of Tarlac, in the Tarlac Province in 1949, by virtue of the Manila Franchise and the reconstituted Certificate of Public Service and Necessity transferred from its former owner, Manila Electric Co.
In October 2016, its franchise was renewed for 25 years under Republic Act 10795. Among the conditions set in the franchise is the public offer.
Initially, the company’s market was mostly residential but as its franchise area developed from a town to a city, its market was transformed into a mix of residential, commercial, and industrial consumers. Last year, the company services 82,632 customers from six different customer classes. Its energy sales last year was at 438,802 megawatt hours.