18 Jan 2010 08:00
17 January 2010
Palm Hills Developments Announces Capital Increase
Egypt's premier real estate developer is building its cash cushion and expanding debt capacity as it gears-up to accelerate the pace of construction in 2010
Palm Hills Developments (PHDC.CA on the Egyptian Exchange), Egypt's premiere real estate developer, will execute an EGP 700 million capital increase, the company's Chief Executive Officer announced today.
"This capital increase will add to our cash cushion as we prepare for a substantial increase in our construction spending and execution this year," said Palm Hills Developments CEO Yasseen Mansour. "We had a total sales backlog of EGP 9.1 billion as of 3Q2009, and all of our launched projects are more than 50% sold. In this context, we see a unique opportunity to increase the pace of our build-out while capitalizing on the currently low price of key construction materials."
PHD, which has both an in-house construction arm and a joint-venture construction operation with leading builder Hassan Allam & Sons, is currently working on five developments in the West Cairo Area, four developments in East Cairo and one on the North Coast. The company plans to begin construction on three additional developments in 2010.
The capital increase will be carried out through a rights issue of 349,440,000 shares at par (EGP 2 per share), with each shareholder being entitled to one share for every two. "We are confident that an issuance at par will be welcomed by shareholders amid current market conditions," added PHD Chief Financial Officer Ihab Swellem.
PHD, which has one of the largest and most attractive land banks in Egypt, delivers residential, commercial and destination tourism projects. "At the same time, as we expand our base of stable equity finance, we are also wrapping up negotiations on an EGP 567 million syndicated loan, where Commercial International Bank (CIB) is the mandated lead arranger for the five-year facility, and have board approval for a bond issue of up to EGP 1 billion," Mansour noted.
"A careful review of our needs for the coming two years under our present business plan leaves us confident that an EGP 700 million cash increase, the contracted loans, and the ability to execute a bond issue will together leave us in an extremely healthy cash position," added Swellem. "Moreover, the fact that we can limit the capital rise to EGP 700 million will prevent us from overly diluting our earnings per share."
News of the capital increase comes as PHD looks to diversify its revenue base to include larger contributions from both the hospitality and commercial sectors, with the goal of delivering 30% of its total revenues from recurring sources within the coming five years. As a step toward that goal, Mansour said, Palm Hills Developments has entered into talks to acquire a controlling stake in Maccor, a leading tourism sector company with hotel properties in Cairo, Sharm El-Sheikh and Ismalia.
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About Palm Hills Developments:
Palm Hills Development (PHD) is a leading real estate company in the Egyptian Market, developing integrated residential, commercial real estate and resort projects. PHD possesses 48.8 million square meters of land; one of the largest and most diversified land banks in the country and is rapidly growing into a regional player.
Currently PHD maintains an impressive roster of more than 32 projects strategically located nationwide and in the region at the following locations:6th of October City, West Cairo, New Cairo; East Cairo, The North Coast, Gamsha; Red Sea, Ain Sokhna; Red Sea Alexandria, Aswan, Riyadh; Saudi Arabia and Jeddah; Saudi Arabia.
Palm Hills Development (PHD) is traded on the Egyptian Exchange under the symbol (PHDC.CA) and on the London Stock Exchange its GDR is traded under the symbol (PHDCq.L)
For more information about Palm Hills Development, Please visit
www.palmhillsdevelopments.com
Please Direct Contact requests to:
Investor Relations Department
Investor.Relations@phdint.com