Coal Asia IPO Priced At Par Value

MANILA, Philippines - Coal Asia's planned IPO will afford the investing public the rare opportunity of buying in at the same price as Coal Asia's incorporators. This is according to the company's prospectus which reveals plans to list 800 million shares on the Philippine Stock Exchange's first board by the fourth quarter of 2012.

The company continues to draw interest from potential strategic and financial investors from the power generation and cement industries as well as investment funds with the objective of owning a stake in Coal Asia as a means to ensure continuous supply of coal and possibly hedge against another potential significant run-up in coal prices.

The company is evidently keen on ensuring the timely development of its high-grade bituminous coal mines as they are strategically located in Mindanao where there is a rush to establish critically needed power capacity, giving Coal Asia a leg up on opportunities for long-term supply agreements for thermal coal in the region.

And while the company previously confirmed having already bagged off-take contracts both here and abroad, Coal Asia also plans to supply steam-grade coal to cement plants, canneries, and manufacturing plants that have converted their diesel-powered plants into coal-powered plants to mitigate costs.

The P726.87-million net proceeds from the IPO is earmarked to bring its Davao Oriental mine into production by 2014 and its Zamboanga Sibugay mine by 2015. Of the proceeds from the IPO, P100 million will be spent for the completion of the exploration and feasibility study of the Davao Oriental mine, P400 million for the development of the Davao mine, and the balance for continued exploration at the Zamboanga Sibugay mine and for working capital requirements.