Emperador raises P19B for loan refinancing

The Emperador group has raised 370 million euros (P19.18 billion) from a new credit facility created to refinance a short-term loan earlier obtained to buy out the iconic, largest and oldest Spanish brandy-maker Bodegas Fundador.

This is under a new euro facility agreement dated Dec. 14, 2016 with lenders Hongkong and Shanghai Banking Corp. Ltd. and J.P Morgan Chase Bank N.A. (Singapore Branch), Emperador Inc. and conglomerate Alliance Global Group Inc. told the Philippine Stock Exchange Wednesday.

The new facility was mentioned in a notice to investors in the $500 million bonds issued in 2010 by offshore unit Alliance Global Group Cayman Islands (AG Cayman). Additional guarantee to this bond was provided by Emperador Inc. and operating arm Emperador Distillers Inc. effective Dec. 20.

The additional guarantees to the bonds—which are listed on the Singapore Exchange—were given in connection with the guarantees provided by Emperador under the new euro facility.

A source said the new euro facility from HSBC and JP Morgan carried a term of five years and that proceeds were used to pay down a bridge loan tapped to buy out Fundador.

“Emperador is required to do a guarantee out of the facility agreement for AGI,” said the source.

“AGI is a holding company and its bond holders are structurally subordinated to the lenders of its operating subsidiaries. A clause in the outstanding AGI Cayman bonds requires its material subsidiaries like to guarantee the AGI bonds should it guarantee the debt of its other subsidiaries like Emperador International Ltd.,” the source added.  The AGI Cayman bonds will mature in August 2017 and this will signal the release of Emperador from the guarantee obligation.

The notes carry a yearly interest rate of 6.5 percent.

Emperador’s acquisition of the assets and production facilities of 286-year-old Bodegas Fundador in 2015 created the world’s largest brandy firm.