Philex Mining Surges After Scrapping Share Sale: Manila Mover

Philex Mining Corp. rose the most in three months in Manila trading after the company said it’s scrapping a plan to sell shares at a discount.

Philex surged 5.2 percent to 8.77 pesos at 1:41 p.m. local time, poised for its largest gain since July 4. The stock is the biggest percentage gainer in the benchmark Philippine Stock Index, which fell 0.1 percent. It sank to the lowest level in almost four years on Sept. 12 after the sale was announced.

Manila-based Philex said in an exchange filing today that it’s canceled a proposed 13.8 billion-peso ($320 million) rights offer because of unfavorable market conditions. The shares would have been priced at no more than 5 pesos each, it said. That would have been at least 11 percent less than initially planned.

“Investor appetite may not be conducive at the moment, not only for Philex but for other issues as well, given the volatility in the market,” Astro del Castillo, managing director at First Grade Finance Inc., said today.

The Philippine Stock Exchange may miss its 200 billion-peso share-sale target this year as companies opt to scale down their initial public offerings, bourse President Hans Sicat said on Sept. 28. Travellers International Hotel Group Inc., a venture of Genting Hong Kong Ltd. and Alliance Global Group Inc., said on Oct. 4 that it cut by almost half the maximum price of its IPO.

Silangan Mine

Philex had planned to sell 2.47 billion shares at 5.60 pesos each at a ratio of one offer share for every two shares owned, according to a prospectus posted on the company’s website in September. The company said today that the sale would have diluted the stake of existing shareholders by a third and the price would have been “substantially lower than the underlying value” of the company.

“The major concern with a stock rights offer is its dilutive effect,” George Ching, an analyst at COL Financial Group Inc., said by phone today. “For new investors, that threat is now gone.”

Philex also said it has approved the granting of a subscription right to shareholder First Pacific Group Ltd. for an equity interest of up to $150 million in its Silangan gold and copper project. The mine in the southern Philippines may have deposits worth $19.4 billion, Philex said in 2010.

First Pacific provided a $150 million credit facility to Philex in March, which was supposed to be repaid from proceeds of the rights offer.

Philex said it will re-examine its fundraising options by the end of 2014, when the feasibility study for the Silangan mine will be close to completion.

“Without Silangan, there’s not much value left in Philex,” Ching said. Philex has extended the life of its Padcal mine to 2020 even as the pace of production has started to decline, he said. Padcal, located in northern Philippines, has been operating since 1958, according to the company’s website.