SEC approves SMC’s P60-B bond program


THE Securities and Exchange Commission (SEC) has given the P60-billion bond program of diversified conglomerate San Miguel Corp. (SMC) the green light.

In an en banc meeting late last week, the corporate regulator approved a shelf registration program for the fixed-rate bonds which gives SMC a three-year authority to raise P60 billion in fresh funds from the debt market.

The shelf registration program enables companies to sell large volume of bonds and stocks in multiple tranches over a three-year period to take advantage of low interest rates.

According to its registration statement forwarded by the SEC to the media late Friday, SMC will first issue P20 billion worth of bonds this year consisting P15 billion in base offer and an option to issue P5 billion more to cover additional demand. This leaves SMC with P40 billion for future issuances.

The P19.8 billion in net proceeds, minus offer and listing related taxes and fees, will partially refinance SMC’s existing US dollar-denominated loans and fund up to P4.8 billion of corporate expenses.

The total loan is equivalent to P20 billion which SMC owes to BDO Unibank Inc. (P13 billion), Bank of the Philippine Islands (P2 billion), China Banking Corp. (P2 billion), Rizal Commercial Banking Corp. (P1.8 billion) and Security Bank Corp. (P1.2 billion).

The balance will cover some of the company’s operating and other expenses, such as overhead expenses and taxes, which SMC intends to spend within 18 months after the issue date.

The initial P20-billion bond offer is composed of five-year Series A bonds due 2022, seven-year Series B bonds due 2024 and 10-year Series C bonds due 2027. The Series A bonds may be priced at 4.9602 percent to 5.4602 percent a year, while the Series B bonds may be sold at a rate of 5.3812 percent to 5.8812 percent and the Series C at 5.8374 percent to 6.3374.

The bonds will be listed on Philippine Dealing and Exchange Corp. (PDEX) and may be traded in the secondary market.

SMC is hiring BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., ING Bank N.V., RCBC Capital Corp., SB Capital Investment Corp. and Standard Chartered Bank as joint lead underwriters and bookrunners.

As of end-September 2016, SMC reported a consolidated net income of P43 billion, up 60 percent from P26.8 billion a year earlier.


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