SEC OKs increase in SM Investments’ capital to P12B

The Securities and Exchange Commission has approved the planned increase in SM Investments’ capital stock to cover stock dividends and prepare for future expansion.

SM Investments disclosed Tuesday to the Philippine Stock Exchange that the SEC had approved an increase in the conglomerate’s authorized capital to P12 billion from P7 billion.

Part of the capital hike will be used to cover the recent declaration of a 25-percent stock dividend, equivalent to about P1.75 billion.

The remainder will be for future expansion, said Cora Guidote, SM Investments’ chief investment relations officer.

“This is in case we decide to declare another stock dividend or if we see expansion opportunities. At least, the option is there,” Guidote said.

At present, SMIC has 630.5 million outstanding shares equivalent to a total capital of P6.3 billion, based on a par value of P10 per share. SMIC shares were traded yesterday at P910 per share, translating to a market capitalization of P588.26 billion, which was one of the highest among listed companies.

SMIC’s shares were down by 2.47 percent Tuesday as the stock market fell to the “bear”  territory for the first time since 2009.

Last month, the SM group finalized a plan to consolidate all property units into a single publicly listed entity under SM Prime Holdings Inc. The combined entity was estimated to have a total market capitalization of about $14 billion.

The consolidation, with a transaction value of P279 billion, will be done in three steps:

Privately-held unit SM Land Inc. will offer existing shares of SM Prime in exchange for the outstanding shares of residential property units SM Development Corp. and Highlands Prime Inc.

SM Land will be merged with SM Prime, with the latter as the surviving entity

SM Prime will acquire specific real estate companies and assets currently held by SM Investments in exchange for new shares in SM Prime.

The consolidation is intended to create an integrated real estate company, which will allow the merged entity to undertake larger scale projects with the participation of all of its business units. This expanded scope, under a “simpler and more transparent” corporate structure, is expected to “create efficiencies and further crystalize the value of the SMIC’s real estate businesses.