Tarlac Electric seeks SEC approval for sale of shares

- By VG Cabuag @villygc

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.

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