CAIRO: Egyptian real estate developer Palm Hills Development (PHD) said Thursday that it will embark on a LE 700 million capital increase. In a press statement, the company said it is building its "cash cushion and expanding debt capacity as it gears-up to accelerate the pace of construction in 2010. "This capital increase will add to our cash cushion as we prepare for a substantial increase in our construction spending and execution this year, CEO Yasseen Mansour said in the statement. "We had a total sales backlog of LE 9.1 billion as of Q3 2009, and all of our launched projects are more than 50 percent 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, he added. The capital increase will be carried out through a rights issue of 349,440,000 shares at par value of LE 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 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. PHD has an in-house construction arm and a joint-venture construction operation with leading builder Hassan Allam & Sons. Mansour also said the company is expanding its base of "stable equity finance and are concluding negotiations on a LE 567 million syndicated loan, of which Commercial International Bank (CIB) is acting as lead arranger for the five-year facility. The board has also approved a bond issue of up to LE 1 billion, Mansour added. "A LE 700 million cash increase, the contracted loans, and the ability to execute a bond issue will 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. PHD recently said it was looking to diversify 30 percent of its total revenue base by focusing on the hospitality and commercial sectors in the coming five years. In that vein, Mansour said PHD has entered into talks to acquire a controlling stake in Maccor, a tourism sector company with hotel properties in Cairo, Sharm El-Sheikh and Ismalia. -Daily News Egypt
