Conglomerate Ayala Corp. has raised $300 million from the sale to institutional investors of low-yielding bonds that can be exchanged for shares of property unit Ayala Land Inc.
The five-year bonds were priced to yield only 0.5 percent a year but holders can exchange these for ALI shares at P36.48 per share—marking a 20 percent premium to market price—at any time on or after June 11 until the 10th day prior to maturity date.
In effect, the conglomerate rode on strong investor confidence on ALI to get cheap financing.
The offering is the first equity-linked international issuance by a Philippine issuer in the past two years. It also achieved the lowest cost of financing across Asia’s emerging markets this year.
During Ayala’s annual stockholders’ meeting on Friday, the conglomerate’s president Fernando Zobel de Ayala reported that this equity-linked offering was oversubscribed by 2.5 times the base offer.
The bonds will mature on May 2, 2019 unless earlier exchanged, redeemed or repurchased in accordance with the terms.
ALI’s shares fell by 2.8% to close at P29.55 on Friday after the deal was announced as investors feared dilution, but Ayala’s chief finance officer Delfin Gonzalez Jr. explained that there would be no dilution of shares held by the public since ALI shares to be exchanged would come from those already owned by Ayala Corp.
Ayala currently holds close to 49 percent of ALI. Assuming that all $300 million bonds were exchanged, Gonzalez said the conglomerate’s stake would go down to 46.5 percent, but will remain the single biggest shareholder in the property firm. Doris C. Dumlao