SCREENGRAB from www.sec.gov.ph
MANILA, Philippines—The Securities and Exchange Commission has approved a plan by Globe Telecom Inc. to raise as much as P10 billion from a public offering of preferred shares.
According to SEC documents, Globe obtained clearance to register up to 20 million in new non-voting perpetual preferred shares at an offer price of P500 per share. These securities are proposed to be listed and traded on the main board of the Philippine Stock Exchange.
Of the total shares, 14 million will comprise the base offer while six million will be for the oversubscription option.
Proceeds from the issuance is expected to help cover Globe’s 2014 projected capital expenditures of $600 million to $650 million.
About a third of the company’s capital spending budget for 2014 is related to trailing payments for the network and IT modernization programs undertaken in prior years. Another third is earmarked for the expansion of its data network, including continued investments in LTE (long-term evolution or 4G) and fixed broadband. The balance will be spent for traditional services: to enhance network performance and improve customer services by building additional sites and in-building solutions.
Aside from this preferred shares issuance, Globe plans to raise the remaining amount needed for this year’s capital spending from internally generated cash flow as well as by contracting a P7-billion term loan with Land Bank of the Philippines.
Preferred shares rank ahead of common shares in terms of dividend payments and in the event of any liquidation or dissolution but they have no voting rights. Dividend rate will be based on local 7-year PDST-R2 benchmark plus a spread of 125 to 175 basis points. Unless redeemed, the dividend rate will be reset on the 14th dividend payment date or seven years from issue date.
Globe has the option, but not the obligation, to redeem in whole but not in part the shares on the rate re-setting date and on any dividend payment date after such re-setting date.
For this offering, Globe Telecom has mandated BPI Capital Corp., BDO Capital & Investment Corp. and SB Capital as underwriters. BPI Capital is likewise the issue manager.