INTERNATIONAL Container Terminal Services Inc. (ICTSI) and Royal Capital B.V. have successfully priced a $450 million offering of senior perpetual capital securities, the company disclosed Wednesday.
The securities, which guaranteed by ICTSI, are structured to constitute equity under the New Perpetual Securities guidelines of International Financial Reporting Standards or IFRS.
This represents ICTSI’s second successful senior perpetual capital securities issuance, the first of which was priced on January 22.
The transaction is significant in several respects. ICTSI remains the only Philippine issuer to have offered US dollar-denominated senior perpetual securities in the international debt capital markets. It also marks the lowest US dollar coupon obtained by a Philippine corporate perpetual security, and achieved a significant reduction in coupon compared to January’s transaction.
“We are pleased with the success of the new issue of senior perpetual securities,” ICTSI Vice-President and Treasurer Rafael J. Consing, Jr. said. “This transaction, which forms part of ICTSI’s overall capital management strategy, achieves for us the twin objectives of lowering our cost of capital and maintaining significant reserve leverage capacity.”
The new perpetual securities were priced at par to yield 5.500 percent per annum, the distribution right conferred by IFRS.
The new perpetual securities shall rank pari passu with all other outstanding unsubordinated obligations of the Issuer, who will have the right to redeem the securities on May 5, 2021 and on any semi-annual distribution payment date thereafter.
The company said that the rate of distribution for the new perpetual securities will be reset every five years from May 5, 2021 and will increase by 2.50 percent per annum after May 5, 2021 for securities not already redeemed by the Issuer.
Consistent with the requirements for equity under IFRS, the Issuer may resolve, at its discretion, to defer payment of distribution otherwise payable on a distribution payment date, the company noted. ICTSI said it intends to use proceeds from the offer of New Perpetual Securities for refinancing and general working capital purposes, including funding of capital expenditures.
The new securities were also widely distributed, with fund managers accounting for 59 percent, banks for 11 percent, and private banks for 30 percent. By geography, the Philippines took up 14 percent, the rest of Asia 70 percent, and Europe 16 percent.
The new perpetual securities bring additional liquidity and allow ICTSI to further enhance its capital structure to better match its long-term port concessions, which have maturities up to 2055, the company said.
Citigroup Global Markets Limited, Credit Suisse Securities (Europe) Limited and Standard Chartered Bank acted as joint lead managers for the issuance.
ICTSI operates a total of 30 common user container terminals located in 20 countries, with a focus on facilities having total annual throughputs ranging from 50,000 to 2,500,000 twenty-foot equivalent units, (TEUs).