SMC firms up P33.5B preferred shares offer

CONGLOMERATE San Miguel Corp. has finalized the terms of its P33.5 billion preferred shares issuance, an exercise meant to refinance an older series of preferred shares.

SMC’s new preferred shares will be issued in three tenors. The five-year SMC preferred shares were priced to yield 5.9431 percent per annum while the seven- and 10-year tenors were priced at 6.3255 percent and 6.872 percent per annum, respectively, the conglomerate disclosed to the Philippine Stock Exchange on Thursday.

The conglomerate will issue 446.667 million in a new series of preferred shares at an issue price of P75 per share.

The public offering of these preferred shares will run from Aug 24. to Sept. 11, 2015. The shares will be listed on the Philippine Stock Exchange on Sep 21.

The preferred shares are peso-denominated, perpetual, cumulative, non-participating and non-voting. If SMC does not exercise it option to redeem the preferred shares on the 3rd, 5th and 7th year and every dividend payment thereafter, it will have to pay 3 percentage points higher than the original rate.

Three foreign banks and six local institutions were mandated to arrange the offering: HSBC, Standard Chartered, ING, BDO, BPI, China Bank, RCBC, PNB and Security Bank.

By redeeming the old preferred shares using proceeds from this new issuance, SMC is seen reducing its interest expenditures.

Three years ago, SMC issued P80 billion worth of preferred shares, then the largest capital market foray in the country. SMC has the option to redeem these shares starting the 3rd, 5th and 7th year and every dividend payment thereafter or otherwise pay a higher rate in accordance with the step-up provision.

From its stable core food, packaging and beverage businesses, the 125-year-old San Miguel conglomerate has embarked on a diversification program in 2007 and since then gained a foothold in high-yielding industries including energy, fuel and oil, infrastructure, airlines and mining.