Coal producer Sultan Mining and Energy Development Corp. has postponed its planned initial public offering (IPO) for next month until the company releases its first-half earnings to give prospective investors a better look at its fundamentals.
In a letter to the stock exchange, Asian Alliance Investment Corp., the lead underwriter for the offer, said that, upon consultation with Sultan, they have decided to delay the offer to late July this year. The IPO was originally scheduled to run from June 26 until July 2, and the listing date was set on July 9.
"This postponement will allow the company to present its interim operating results as of the first half of 2008 to prospective investors," it said.
While there remains strong interest in Sultan's IPO despite current unfavorable market conditions, investors have been observed to be more cautious and sidelined, the company said. Waiting for the release of the company's financial results will address these uncertainties and assure investors of the its earnings capacity.
Sultan remains committed to pushing through with its IPO as it pointed out that energy stocks, particularly coal, have been insulated from the weakness of the global market since coal prices have been rising on the back of record high oil prices.
Sultan 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.
To meet growing demand and take advantage of surging prices, Sultan is ramping up coal production in its Surigao del Sur mine to at least 300,000 metric tons this year from less than 20,000 MTs in 2007.
Company senior vice-president for operations Ricardo Basallo Jr. sees production volume to steadily increase once additional open pits.
Sultan plans to use the offer proceeds to partially finance its capital expenditures related to additional exploration of its coal operating contract areas, and improvements and expansion of coal extraction and processing facilities. It will also use the funds to pay existing debts.
For April alone, Sultan reported a 120-percent increase in production volume to 22,000 MTs, exceeding figures for the entire first quarter of the year. In May, it said output expanded further to 25,000 MTs.