Sultan in talks with three foreign buyers for coal supply deals

ABS-CBN News

Posted at Jun 19 2008 04:58 PM | Updated as of Jun 20 2008 12:58 AM

Sultan Mining and Energy Development Corp. is talking to three foreign buyers for possible coal supply contracts as it plans to start exporting its output this year to take advantage of high prices.

At the sidelines of the company's initial public offering (IPO) roadshow, Sultan chief operating officer Romina Lu said two buyers were from China and Japan while the other one was a global coal trader.

She said the company was also targeting to export coal to India since coal prices continue to go up in the global market.

Lu said there has been worldwide shortage of coal due to strong demand from the red-hot economies of China and India, which have sturdy power generation industries.

She noted that Indonesia, one of the world's top producers of coal, had to contend with some political issues preventing it from selling coal to these countries, thus, giving the Philippines more export opportunities.

Company president Frederick Lu said, however, that Sultan would only export 25-30 percent of its output and reserve the bulk to supply local buyers.

He said the company was ramping up production in its Surigao del Sur mine "as fast as we can."

Sultan will use funds from its planned initial public offering (IPO) to start underground coal mining while operating several open pits at its Bislig site.

Its IPO is scheduled to run from June 26 until July 2, with the listing date set on July 9. The company is offering domestic investors 480 million new common shares at a par value of P1.00 each. The shares will be equivalent to 33.5 percent of the company's outstanding capital after the maiden offer.

It has appointed Asian Alliance Investment Corp. as lead underwriter for the offer. Asian Alliance has been granted an option to purchase or place up to 48 million Sultan shares, representing 10 percent of the offer for the purpose of covering over-allotments.

Net offer proceeds will be used by the coal and energy firm to partially finance its capital expenditures related to additional exploration of its coal operating contract areas, improvements and expansion of coal extraction and processing facilities, to pay existing debts and finance working capital requirements.