Security Bank gets approval for 1B preferred-shares issue

MANILA, Philippines—Security Bank Corp. obtained approval from shareholders on Tuesday to create one billion in new voting preferred shares, an exercise meant to allow the bank to deal with foreign equity limits than raise fresh funding.

The bank plans to issue 602.83 million preferred shares to holders of common stock through a one-for-one rights offering after the distribution of the 20-percent common stock dividend. Security Bank president Alberto Villarosa said this would likely happen by the first quarter of 2014, during which clearance from the Bangko Sentral ng Pilipinas and Securities and Exchange Commission would have been obtained.

The preferred shares will have a par value of P0.10. The creation of these preferred shares will require increasing the authorized capital from P10 billion to P10.1 billion to accommodate P100-million worth of preferred shares, the bank said in a statement.

The voting preferred shares will be non-cumulative, non-participating and non-convertible into common shares. Dividend will be equivalent to 10-year PDST-R2 and repriced every 10 years thereafter. They will neither be listed on the Philippine Stock Exchange nor registered under the Securities Regulation Code.

While issuance will raise only a small amount of fresh capital for the bank amounting to P60 million for the first tranche of 602.83 million preferred shares, which will be issued at par value, this gives the bank more flexibility to accept foreign investors.

It was estimated that Security Bank is nearing breach of the foreign equity limit of 40 percent. Because the bank has real estate assets, foreigners are allowed to own only up to 40 percent of outstanding shares to comply with the ceiling for selected industries as prescribed in the Philippine Constitution.

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