SM Investments gets SEC nod to sell P50-B retail bonds
The Securities and Exchange Commission (SEC) has approved a plan by leading local conglomerate SM Investments Corp. (SMIC) to sell as much as P50-billion worth of retail bonds.
The initial tranche of SMIC’s bond offering will amount to as much as P20 billion, consisting of P15-billion seven-year bonds and P5 billion to cover the oversubscription option.
The firm was targeting to launch the offering on Nov. 23 until Nov. 29, based on a document released by the SEC on Friday.
Net proceeds from the initial tranche will be used to finance future investments and strategic acquisitions in core business segments, namely property, retail and financial services.
“The company has identified potential investments and acquisitions that are in the early stages of evaluation. Depending on the results of the evaluation and due diligence, such potential investments and acquisitions may not materialize,” SMIC’s prospectus read.
SMIC expects that at least 70 percent of the net proceeds would be utilized during the last quarter of 2016 until the first quarter of 2017.
Shelf registration window
The offering will be made via a three-year shelf registration window. This mechanism created by the SEC allows an issuer like SMIC 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.
In the event that the oversubscription option is not fully exercised, the unused portion would be made part of the remaining bonds that should have to be used up within a three-year period, SMIC said.
Outside of its core banking (BDO Unibank and China Bank), property (SM Prime) and retailing businesses (SM Retail), SMIC has interests in mining (Atlas Consolidated Mining) and community mall development (as an investor in DoubleDragon Properties’ flagship subsidiary CityMall Commercial Centers Inc.).
Local credit watchdog Philippine Rating Services Corp. has assigned a triple-A credit rating to SMIC’s proposed bond issue.
The bonds were rated “PRS Aaa,” the highest rating assigned by PhilRatings, denoting that such obligations are “of the highest quality with minimal credit risk” and that the issuer’s capacity to meet its financial commitment on the obligations is “extremely strong.”
In the first nine months of 2016, SMIC booked an 11-percent growth in net profit to P22 billion as the fast-growing economy boosted earnings across its retail, banking and property businesses. Excluding one-off items, core profit rose by 9 percent year-on-year during the first nine months, matching the 9 percent rise in consolidated revenues to P252.4 billion for the period.
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