SMIC to source 40% of P85B capex to debt

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SM Investments Corp. (SMIC) plans to raise fund for 40 percent of its P85 billion capital-spending program this year a—either through a bank loan or bond issue, Jose Sio, SMIC chief financial officer.

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“(The 2015 capital expenditure) is P85 billion. Usually one-third or 40 percent of that will be outside sources. Yes, (it will be) debt,” Sio told reporters at the sidelines of Latham & Watkins 2nd Annual Investment Conference on Wednesday.

“It will be mainly bonds — debt. Not equity,” Sio said. “Locally or international, we prefer it local if its debt, any kind of debt (banks or bonds). You have to be fluid, don’t stick to one.”

Asked when they will start the fund raising initiatives, Sio said “as soon as possible” within the year as it will be part of the company’s debt management.

“For us, it is the timing (to raise funds from debt). As long as it is the right time, there’s liquidity and low interest rates, then we will (exercise). We don’t go out (and do fund raising initiatives) because we need funds. We go out because it’s an opportunity for us,” he said.

“The government regulatory agencies should fix the approval system to expedite the issuances,” Sio said.

Last year, SMIC raised separate amounts of P15 billion and $350 million funds from bond issuances in May and June, respectively. Both fund raising initiatives were used to finance the company’s P80-billion spending program in 2014.

This year, the company has programmed up to P85 billion for its capital spending, bulk of which will go to its property vehicle SM Prime Holdings Inc.

SM Prime has a five-year plan from 2013 to 2018 to spend P400 billion capital expenditures (capex) to double net income and revenues, as well as its existing portfolio of malls, offices, hotels and other leisure-related developments.

This year, SM Prime’s has five mall openings in the Philippines including the large-scale SM Seaside City Cebu as well as the two malls in China—SM Zibo in March or April and the 530,000-sqm SM Tianjin by end-2015.

SMIC’s consolidated net income in 2014 inched up by 3.6 percent to P28.4 billion from P27.4 billion a year ago as its consolidated revenues likewise climbed by 9 percent to P275.7 billion from P253.3 billion on strong retail sales and robust revenues in its property segment.

SMIC is the holding firm of the Sy family, having business interests in property (SM Prime Holdings Inc.), banking (BDO Unibank Inc.) and retail (SM Retail Inc.). It also has affiliates such as China Banking Corp. and casino and entertainment firms Belle Corp. and Premium Leisure Corp.

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