MANILA - Publicly listed First Gen Corp. announced on Tuesday it will increase authorized capital stock to P7.250 billion from P3.750 billion in line with its plans for a stock rights offering amounting to P15 billion.

The Lopez-owned company said it believes that the rights offering will strengthen its balance sheet.

Its stock rose the most in almost a month in yesterday’s trading. First Gen climbed 4.8% to P16.25 in midtrading, the most since September 8.

Parent First Philippine Holdings Corp. was unchanged at P37 and the benchmark Philippine Stock Exchange index rose 2%.

First Gen will seek shareholder approval on November 20 to increase its authorized capital to 3.23 billion common shares and 1.5 billion voting preferred shares to cover the rights offer, it said in a disclosure to the stock exchange.

Proceeds from the rights offering will be used to provide additional liquidity to manage the company’s debt position and for other general corporate purposes.

First Gen noted that it believes that the rights offering is an equitable fundraising option as existing eligible shareholders will have the opportunity to subscribe their pro-rata shareholding in the company and thus not be subject to dilution.

“The stock rights offer will help First Gen bring down its debt to a more sustainable level,” Citiseconline.com analyst George Ching said in a phone interview. “It’s positive for the stock over the long term.”

For its part, First Gen said: “Allowing existing eligible shareholders to participate in a non-dilutive fundraising exercise by way of a rights offer was among the principal considerations of the equity financing transaction.”

First Gen further added that the quantum of the increase in authorized capital stock is intended to provide for the share capital requirements of the rights offer which may vary depending on the fluctuations in the company’s share price between now and the date the rights offer price is determined.

“The proposed increase in capital stock also takes into consideration the company’s need to maintain adequate authorized capital to allow for the issuance of additional shares related to adjustments in the conversion price of the company’s outstanding convertible bonds as a result of the rights offer and other corporate actions,” First Gen said.