Share Comment: Solar Philippines NEC Board Approves Stock Rights Offering

Merkado Barkada

February 15, 2022 | 8:00 a.m.

The board of directors of the solar energy start-up, owned by Leandro Leviste, has approved a plan to carry out a stock rights offering (SRO) to raise funds from existing shareholders.

Other details were not made available, such as the size of the increase, the price per SRO share or the record date the SRO will use to determine eligible buyers.

In the same disclosure, Solar Philippines NECit is [SPNEC 2.19 5.29%] the board has authorized the use of proceeds from the SRO (and whatever proceeds from the IPO, “as available”) to purchase land in support of SPNEC’s medium-term plan to to develop 10 gigawatts (GW) of solar projects through joint ventures with larger and more mature energy development companies like AC energy [ACEN 8.60 0.92%] and Aboitiz Power [AP 34.90 2.50%].

It was unclear based on this disclosure whether any of the SRO funds would go towards purchasing operational projects from its parent company, Solar Philippines (also owned by Mr. Leviste).

SPNEC had indicated last month that it would buy these projects from Solar Philippines through an exchange of assets for shares, and that it could carry out an SRO “to support the development of these projects”.

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SPNEC’s aggressive approach to capitalization was all but out of ACEN’s playbook as of 2021, when ACEN conducted an SRO in January, a private placement in March, an exchange of assets for shares in April with its parent company and a follow-up offer in May.

If the situations are not perfectly aligned (and the differences increase as we zoom in), it is clear that SPNEC will have to develop through injections of capital and assets if it hopes to reach all of its big, bold goals (10 GW capacity, annual dividends, etc.) at once.

Whatever they do will need to be presented in more detail to shareholders and approved by a vote at SPNEC’s extraordinary general meeting of shareholders on March 7, so while I expect to hear a lot more about how which SPNEC is proposing to carry out this capital increase, I don’t suspect that will actually happen until sometime in the second half of the second quarter of this year.

SPNEC stock is again showing (a little) strength posting two consecutive positive days, after falling almost 13% from its peak of 2.32 P/share on February 2.

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Merkado Barkada’s opinions are provided for informational purposes only and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor should do their own due diligence before trading, as the facts and figures in each particular article may have changed.

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