SEC oks SMC, ALI fund-raising

THE SECURITIES and Exchange Commission (SEC) has given diversified conglomerate San Miguel Corp. and property developer Ayala Land Inc. (ALI) leeway to pursue big-ticket fund-raising activities worth a combined P123 billion for the next three years.

This approval allows SMC to immediately launch the offering of an initial tranche of up to P30 billion preferred shares. Separately, ALI was given mandate to proceed with an initial offering of 10-year bonds worth as much as P8 billion to boost funds for the redevelopment of the defunct hotel Intercon hotel area and the Ayala Triangle Garden.

Based on SEC documents, the SEC had approved a plan by SMC for the “shelf registration” of up to P73.2 billion worth of preferred shares. Likewise approved was ALI’s proposed “shelf registration” of up to P50 billion worth of debt securities.

Shelf registration allows an issuer to register and sell under the same prospectus and other regulatory filing requirements a certain volume of securities that the issuer does not intend to use up right away.  The SEC gives the issuer a three-year window to use up the shelf registration.

SMC, for its part, was authorized to sell up to 975.57 billion preferred shares at P75 per share under the shelf registration process. The initial offering is worth P30 billion consisting of up to 400 million preferred shares, including an option to upsize by 120 million preferred shares in case of strong demand.

Based on regulatory filings, the conglomerate plans to use P20 billion in expected proceeds from the first tranche to refinance existing US dollar-denominated debt obligations. SMC also intends to infuse equity in existing businesses such as SMC Global Power Holdings Corp., San Miguel Holdings Corp., Vega Telecom and San Miguel Properties Inc. The remaining proceeds will be used for general corporate purposes.

The new series of preferred shares will have three sub-series, the indicative dividend rates of which will be based on five-, seven- and 10-year interest rate benchmarks.

SMC has mandated the following as lead underwriters and bookrunners for this transaction: BDO Capital & Investment Corp., China Bank Capital Corp., ING Bank, PNB Capital and Investment Corp., RCBC Capital Corp., SB Capital Investment Corp., Standard Chartered Bank and United Coconut Planters Bank. Each of these banks has committed to raise P2.62 billion for the conglomerate. Bank of Commerce was tasked as a selling agent.

On the other hand, ALI’s shelf registration gives it the leeway to offer debt securities in the form of commercial paper, “Homestarter” bonds and fixed-rate bonds.

The initial tranche of P8 billion will be in the form of fixed rate bonds due 2026.

Based on the documents, proceeds will be used to redevelop the old hotel Intercon into a retail, business process outsourcing (BPO) and transport hub. Part of the proceeds will also cover the redevelopment of the Ayala Triangle Garden.