San Miguel offering P20B in retail bonds

Conglomerate San Miguel Corp. has launched a new offering of retail bonds worth as much as P20 billion, raising fresh funds to refinance debt and fund massive capital outlays.

SMC’s fixed rate bond offering consists of five-year bonds priced to yield 4.8243 percent a year, seven-year bonds priced to yield 5.2840 a year and 10-year bonds yielding 5.7613 percent a year.

The offer period started on Tuesday and would run until Feb. 20 this year.

The joint lead underwriters and bookrunners are BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., ING Bank NV, RCBC Capital Corp., SB Capital Corp. and Standard Chartered Bank.  SMC’s banking arm, Bank of Commerce, is a selling agent.

The offering is part of a P60-billion bond offering program approved by the Securities and Exchange Commission.

Under the shelf registration program allowed by the SEC, securities to be issued in tranches could be registered for an offering to be made on a continuous or delayed basis for a period not exceeding three years.  The issuer is allowed to use the same prospectus for various tranches of securities offering under such mechanism.

Two years ago, SMC mapped out a P543-billion expansion program, of which P262 billion had already been spent through end-September last year, mostly for Petron Corp.’s refinery upgrade.  This leaves some P281 billion in capital outlays for traditional and new businesses in the next two to three years.

SMC expects to breach the P1-trillion revenue goal in the next two to three years as the group completes a massive expansion program of traditional and new businesses. The target is to double operating income in the next five years, translating to an expansion of 13-14 percent yearly.

Since 2008 when SMC started its diversification program, revenue has expanded by four times to P674 billion in 2015 from P168 billion.   In the first nine months of 2016, revenue hit P513.21 billion versus P505.5 billion in the comparative year.

New businesses—referring to fuel and oil, power generation and infrastructure—now account for 66 percent of SMC’s revenues.