Megawide takes 10% stake in Citicore Renewable Energy

Megawide Construction Corp. has acquired a minority stake in affiliate company Citicore Renewable Energy Corp. (CREC). This enables the engineering and infrastructure firm to beef up its balance sheet.

In a statement on Friday, Megawide said this happened through a P4.9-billion deal with Citicore Power Inc. (CPI) via a block sale.

The transaction involved the transfer of share ownership rather than the issuance of new shares. Thus, shareholders will not suffer a dilution of their equity.

“For Megawide, this asset injection will strengthen the company’s balance sheet and overall equity position,” said Edgar Saavedra, chair and CEO of Megawide.

“From a valuation standpoint, the infusion represents an additional boost to our existing market capitalization and immediate upside to shareholders and investors,” Saavedra added.

According to Megawide, the block share sale represents the bulk of the settlement of advances it had agreed upon with the Citicore Group.

CPI and sister company Citicore Holdings Investment Inc. currently owe Megawide P9.4 billion in advances. Of that amount, P4.69 billion is due from Citicore Holdings while P4.73 billion will come from CPI.

Settlement deal

In 2016, Megawide extended financial advances to CPI to support the launch of the latter’s renewable energy company.

Under their settlement deal, the debts will be settled via the issuance of CREC shares.

“The assistance extended by Megawide way back in 2016 was crucial in incubating our renewable energy platform and enabling Citicore to power up to where it is now,” said Oliver Tan, president and CEO of CPI.

The deal also comes amid expectations that Megawide would triple its profit by 2027 on robust prospects for its construction, land port and real estate businesses.

Analysts see the government’s aggressive anticorruption drive favoring large contractors like Megawide. Its major infrastructure projects include public-private partnerships.

As of the first semester this year, Megawide’s net income was flat at P436 million. This is 81 percent of its 2024 full-year net income of P538 million.