Bloomberg News

Megaworld Drops on Speculation Sale Will Be Shunned

February 12, 2009

Megaworld Corp. fell to a two-month low in Manila on concern investors will shun a planned 9 billion peso ($191 million) rights offer by the third-largest Philippine builder by market value.

Megaworld sank 6.7 percent to 56 centavos at the noon close in Manila, its lowest level since Dec. 8. The shares have fallen 11 percent in four days, the longest losing streak since Nov. 25. The stock was the biggest loser among the six components of the Philippine Stock Exchange Index that fell today. The benchmark index closed up 1.4 percent.

Manila-based Megaworld said yesterday it will offer one share for every four held by shareholders at one peso each to help fund a 30 billion peso, three-year capital spending plan. The rights offer will also come with warrants that allow its holders to buy one share for every warrant held, it said.

“Against an environment of decelerating property demand and the company’s net cash position, the timing of the rights issue is questionable and would likely be taken negatively by the market,” Kelly Lim-Bate, analyst at JPMorgan Chase & Co., said in a report released today. “This issuance will likely be taken up primarily by parent company Alliance Global.”

Alliance Global Group Inc., the second-biggest loser in the index, fell 3.5 percent to 1.66 pesos. It is the stock’s biggest loss since Jan. 13.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net.


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