Corporate News

Del Monte plans dollar-denominated securities

Posted on December 05, 2016

DEL MONTE Pacific, Ltd. looks to launch by January what could become the country’s first listing of dollar-denominated securities (DDS), banking on the domestic economy’s liquidity amid the volatility in the market.

“If we can’t make it this month, we will launch the offer in January instead so at least we can have the first dollar issue,” Eduardo V. Francisco, president of issue manager BDO Capital & Investment Corp., told reporters in a mix of English and Filipino last Thursday.

The company, listed on the Singapore Exchange and the Philippine Stock Exchange (PSE), registered 36 million preferred shares worth $360 million with the Securities and Exchange Commission (SEC) for three years.

Del Monte intends to initially issue $100 million to $150 million from the shelf offering, Mr. Francisco said.

The company had planned to launch the initial tranche comprising 15 million preferred shares with a maximum price of $10 apiece along with an oversubscription option for 10 million shares as early as Jan. 25 and list them on Feb. 5.

The SEC, however, only approved the shelf registration of Del Monte for the perpetual, cumulative, nonvoting, non-participating, nonconvertible series A preferred shares on May 31.

Yet, the company had to wait for the approval of the rules governing the listing, trading and settlement of DDS on the equities bourse. The framework did not receive approval from the SEC until Nov. 10.

In a memorandum issued on Friday, the PSE published the relevant rules in their final form, paving the way for Del Monte and other prospective issuers to pursue plans of issuing DDS on the local exchange.

“If the PSE is able to convene and meet mid-December [to approve the listing application] -- but for me to prepare and everything, I don’t think we can launch the offer because it’s already Christmas,” Mr. Francisco said. “The prospective investors are probably on Christmas vacation by then.”

BDO Capital and BPI Capital Corp. act as lead underwriter and bookrunner of the issue that will refinance a $350-million bridge loan with BDO Unibank, Inc.

China Banking Corp., PNB Capital and Investment Corp. and SB Capital Investment Corp. were tapped as underwriters as well.

Mr. Francisco is confident the issue will receive strong demand when it launches in January despite the persistent volatility in capital markets across the globe.

The impending rate hike and possible policy shift toward protectionism in the United States, among others, have kept the local stock barometer below the 7,000 mark and pulled the peso near the P50:$1 level.

“If I’m a foreign investor, the issue makes a cheap investment. For locals, the target is those with FCDU (foreign currency deposit unit) accounts already, so instead of leaving it in time deposit, they will just buy DDS,” Mr. Francisco said.

The weakness of the peso may discourage local investors without existing dollar holdings from participating in the funding exercise because buying dollars from the banking system has become more expensive.

“But the investment portfolio in the FCDU is huge anyway,” Mr. Francisco noted. “So, that’s what we’re banking on.”

Mr. Francisco further cited the strong demand for the initial public offering of Shakey’s Pizza Asia Venture, Inc. for P3.96 billion, along with the initial tranches of the preferred share issue of Arthaland Corp. for P2 billion and the bond sale of DoubleDragon Properties Corp. for P10 billion.

The maiden offering of Shakey’s has been oversubscribed “several times” even before the public offer period opened on Dec. 2, Mr. Francisco said on the sidelines of an investors’ briefing in Makati City on Thursday.

Shakey’s had pegged the maximum price of its IPO comprising 351.9 million common shares at P15.58 apiece for a total of P5.48 billion. It would later cut the price to P11.26 per share.

Mr. Francisco noted that economic and political uncertainties at home and abroad have made selling issues difficult “that’s why, when you sell, you talk about the economy and the government because they ask about that even before you talk about the company.”

“Despite that, at least we covered the book, but that’s why also in fairness we didn’t price it at the high end because of the concerns and everything. Otherwise, you get the price of P15 but at least that gives upside to the investors,” the banker said.

“So, at least that’s the good story. The capital market is working -- moving well -- despite the problems of the global concerns.” -- Keith Richard D. Mariano