San Miguel readies issuance of $1-billion perpetual securities

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SAN MIGUEL Corp. (SMC) is planning to issue perpetual securities worth up to $1 billion or about P50.72 billion, which it will not offer to the public.

In a disclosure to the stock exchange Thursday, the conglomerate said its board of directors had approved the issuance of the securities either in US dollars or its equivalent in Philippine pesos.

The securities will have a fixed rate, cumulative, and payable on a quarterly basis, and will not be offered to the public.

“The board of directors approved and confirmed the delegation to management of the authority to determine the date/s of issuance, extent of the amount of the issuance, and terms and conditions of the issuances of the perpetual securities,” it said.

SMC did not disclose the purpose of the issuance.

Compared to other bonds, a perpetual bond is a fixed-income security that has no maturity date, therefore its investors may not redeem their investments but are instead paid through a steady stream of interest payments.

In a separate disclosure, SMC said its board had approved reactivating its shelf registration for P60-billion short-term commercial papers, and to change the use of proceeds from its proposed initial issuance of up to P25-billion commercial papers.

To recall, SMC applied with the Securities and Exchange Commission to register P60-billion short-term commercial papers, from which it will issue an initial tranche of P20 billion with an oversubscription option of P5 billion.

Originally, proceeds from the first tranche were to be used to partially finance the redemption of SMC’s preferred shares, the costs of the shelf registration and issuance, and for other general corporate purposes.

On March 20, a few days after the Luzon lockdown began, the company decided to defer the processing of its registration “until such time that conditions stabilize.”

Now, the SMC board has approved delegating its management to “reactivate the registration statement, determination of the offer size, pricing, issuance date and negotiation of fees.”

Proceeds from the initial issuance will be used to pay off short-term loans for working capital and payment of related transaction fees, costs and expenses of the issuance.

Earnings of SMC dropped 91% to P1.09 billion in the first quarter as an impact of the coronavirus disease 2019 pandemic.

Shares in the company at the stock exchange shed 10 centavos or 0.10% to close at P95.90 each on Thursday. — Denise A. Valdez