Conglomerate San Miguel Corp. is selling 10-year bonds at an initial price guidance of 5.125 percent a year as part of its newly established $2-billion Euro Medium Term Note (EMTN) program.
In a disclosure Thursday to the Philippine Stock Exchange, SMC said it would issue unsecured bonds using the “Reg S” format. This means that the securities may be sold to investors outside the United States.
The bonds to be issued through the EMTN program will have a 10-year tenor. But SMC, an unrated issuer, has the option to redeem the debt paper starting the fifth year. The bonds will be listed on the Singapore Exchange Ltd.
The EMTN program is a medium-term foreign currency funding facility that allows issuers enough flexibility to issue debt notes denominated in foreign currencies in international capital markets. These are offered on a continuing basis, rather than a one-time deal like a bond issue, thus making it easier for an issuer to tap offshore capital markets.
The issuer maintains a standardized document and usually sells through preselected buyers.
This type of debt program allows the issuer to maintain stable cash flows, allowing the company to customize borrowings to better match its financing needs. This borrowing tack also allows a company to register with the SEC only once.
Proceeds from the issuance are intended to be used by the SMC group for general working capital purposes as well as for refinancing, including the repayment of a bridge facility arranged by Deutsche Bank and Standard Chartered Bank.
Mandated as joint bookrunners for the notes issuance are ANZ, BofA Merrill Lynch, DBS Bank Ltd., Deutsche Bank and Standard Chartered.
SMC grew its attributable net income by 57 percent to P27.6 billion last year due to higher earnings of its beer, food, power generation and packaging businesses. Group-wide sales revenue expanded by 30 percent to P699 billion, with each major operating unit contributing to growth. Cash flow, as measured by earnings before interest, taxes, depreciation and amortization, went up by 1 percent to P78.1 billion.
Revenues from new businesses jumped by 46 percent over year-ago levels, accounting for more than 70 percent of total revenues last year. San Miguel’s core beverage, food, and packaging businesses, on the other hand, posted a year-on-year increase of 4 percent.—Doris C. Dumlao