SAN MIGUEL Corp. (SMC) said Friday that it registered with the Securities and Exchange Commission a planned issue of P10 billion in fixed-rate bonds, the proceeds of which could help redeem a preferred share issue.
The conglomerate told the stock exchange that the issuance will make up part of its shelf registration of P60 billion in peso bonds.
Based on its preliminary offer supplement, SMC plans to use the net proceeds of the issuance either to fund the redemption of its outstanding preferred shares or for the refinancing or re-denomination of an existing loan obligation.
Should the company exercise its option to redeem the preferred shares, it will be initially funded through a bridge loan, the company said. It placed the amount at P6,782,115,000 by October 2019.
It estimated the amount for refinancing or re-denomination at P3,093,935,000 to be disbursed within six months from the issue date.
“Pending the above use of proceeds, [SMC] shall invest the net proceeds from the Offer in short-term liquid investments including but not limited to short-term government securities, bank deposits and money market placements which are expected to earn at prevailing market rates,” the company said.
“In the event such investments should incur losses, any shortfall will be financed from the Company’s internally generated funds,” it added.
The bond offering is the fourth and final tranche to be issued from SMC’s P60-billion fixed rate bonds shelf registration. The bonds will be used on Oct. 4, 2019 and due 2024. They will be issued in minimum denominations of P50,000 each, and in integral multiples of P10,000. It will be traded in the secondary market in P10,000 denominations.
The company plans to issue the bonds to institutional and retail investors in the Philippines through a public offering to be conducted through the joint lead underwriters and bookrunners. The offer does not include an international offering. The offering period is scheduled on Sept. 23 to 27.
“The bond issuance has been given a rating of PRS Aaa by Philratings,” it said.
SMC is one of the country’s largest groups in terms of revenue and total assets. It described its sales to be equivalent to about 5.9% of Philippine gross domestic product in 2018.
On Friday, SMC slipped 0.74% to close at P174. — Victor V. Saulon