Corporate News


Ayala raises $300M, sets ‘record’ capex




Posted on April 13, 2014


AYALA CORP. has raised $300 million from bonds to help it pursue "investment opportunities in new growth areas", the country's oldest conglomerate said in a press statement attached to a disclosure on Friday, adding that it also plans "record" capital expenditures for this year.

"Ayala Corp., one of the largest conglomerates in the Philippines, announced today the pricing of the offering by AYC Finance Limited, a wholly owned and guaranteed subsidiary of Ayala Corp., of $300,000,000 aggregate principal amount of its 0.50% bond due 2019," the statement read, adding that the bonds are exchangeable for common shares of unit Ayala Land, Inc.

"The bonds have been offered outside the United States under Regulation S of the US Securities Act of 1933 and to qualified institutional investors within the Philippines in transactions that do not require registration of the bonds under the Philippine Securities Registration Code."

The bonds may be exchanged for already-issued and outstanding Ayala Corp.-owned Ayala Land shares starting June 11, 2014 at P36.48 per Ayala Land share, representing a 20% premium over the property developer's P30.40-per-share closing price on April 10. The bonds may be redeemed by the conglomerate starting May 2, 2017, if the closing price of Ayala Land shares is at least 130% of the price on the bourse for 30 consecutive trading days.

The property developer's shares lost 85 centavos or 2.80% to end P29.55 apiece on Friday from P30.40 each on Thursday.

Ayala claimed that the offering is the first equity linked international issuance by a Philippine issuer in the past two years.

"This offering is important as it enables us to continue the pursuit of investment opportunities in new growth areas and the realignment of Ayala Corp’s portfolio mix to further optimize shareholder returns," the same statement quoted Jaime Augusto Zobel de Ayala, chairman of Ayala Corp., as saying.

Goldman Sachs International served as the sole international bookrunner of the offering and BPI Capital acted as sole domestic lead manager.

RECORD CAPEX

At the same time, the conglomerate said in a separate statement attached to a disclosure that it plans to spend P187 billion in capital expenditures (capex) this year, 46.09% bigger than last year's P128 billion.

"This is a record amount of investments for the group..." the statement read, adding that "bulk" of the amount will be spent on Ayala Land's expansion, ongoing network upgrade of Globe Telecom, Inc., service improvement of Manila Water Company, Inc., as well as to fund expansion of power and transport infrastructure.

"Our combined group capital spending has expanded aggressively over the past five years, amounting to nearly P500 billion as our core businesses in real estate, banking, telecommunications and water distribution executed aggressive growth strategies to seize investment opportunities in their respective sectors,” Mr. Zobel noted.

The same statement quoted Ayala President and Chief Operating Officer Fernando Zobel de Ayala as noting that the group's "core business units turned in a solid performance as we continued our efforts to aggressively expand in our markets and in new growth sectors.”

He particularly cited making headway in power and transport infrastructure ventures over the past three years.

“We continued to build our portfolio in power and have a pipeline of projects. Our target is to invest a total of $800 million in this sector by 2016," he said.

"In the area of transport infrastructure, we have won two of the three projects that we bid for under the government’s public private partnership program and look forward to delivering these in the coming year."

Ayala has bagged two public-private partnership road projects: the Daang Hari-South Luzon Expressway connector road, as well as the Automated Fare Collection System project, which it won under the AF Consortium, a partnership between the Ayala and First Pacific groups.

Ayala’s net income grew 23.72% to P24.125 billion last year from P19.499 billion in 2012, while net income attributable to controlling shareholders expanded 21.64% to P12.778 billion from P10.504 billion on the back of “sustained robust performance of its real estate and banking businesses.”

The conglomerate’s profit growth last year surpassed 2012’s 21.07% expansion from P16.106 billion in 2011.

Ayala shares gained P6 or 0.98% to close P619 apiece on Friday from P613 each on Thursday.