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Developer sells P5-B receivables, eyes P8-B capex for 2020

Mass housing developer 8990 Holdings, Inc. said it has liquidated P5 billion of its receivables to finance its various projects.

The company said in a statement on November 18, 2019 that it plans to spend P4 billion for its various projects nationwide in 2019 and double its capital expenditures (capex) in 2020.

Liquidating its receivables will ensure that the company is able to finance its projects through internally generated funds and lessen reliance on debt.

Net debt to equity as of September 2019 is at 0.94x, way below its covenant ratio of 1.5x.

The company sold P5 billion worth of its Contract-to-Sell (CTS) receivables to Dearborne Resources and Holdings Inc., a local financial holding corporation. The transaction was funded by China Banking Corporation.

This brought the total amount of receivables sold to P15 billion since 2018, when the company also liquidated P10 billion of CTS receivables.

The purchase price was based on the outstanding principal balance of the receivables, which means that 8990 Holdings received the full value of the contracts. The sale of receivables is on a non-recourse basis.

As of September 2019, the company had a receivables portfolio of P20.9 billion. This declined by P5 billion with the sale and is expected to decline further with the company’s P2.5-billion securitization deal by the end of 2019.

The developer targets to hit P20 billion in revenues by the end of 2020, as its largest project starts contributing to its topline.

Urban Deca Homes Ortigas, located along Ortigas Avenue Extension, was launched in July 2019. It will offer a total of 19,046 condo units.

Just two months from the launch, the company said it booked sales reservations equivalent to P1.5 billion. (Ventures Cebu)

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