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first tranche: 7-year bond offer worth up to P12B

SEC oks Megaworld’s P30B debt offer

/ 04:19 PM March 09, 2017

The Securities and Exchange Commission has approved a plan by tycoon Andrew Tan-led property developer Megaworld Corp. to raise as much as P30 billion from the local debt market over the next three years.

The first tranche of the offering is worth up to P12 billion comprising of fixed-rate bonds due 2024. This will consist of a base offering worth P8 billion and an oversubscription option of P4 billion, based on a document from SEC.

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Net proceeds from the base offer, estimated at P7.92 billion, will be used to fund capital expenditures. Net proceeds are estimated at P11.88 billion including the overallotment option.

Proceeds will be disbursed for the following projects: Iloilo Business Park, McKinley Hill, McKinley West and Uptown Bonifacio.

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In an earlier disclosure when it filed the registration statement for this debt offering plan, Megaworld said it has appointed BDO Capital & Investment Corp. as issue manager, lead underwriter and bookrunner.

The P30-billion borrowing program submitted by Megaworld for shelf registration will be a mix of fixed rate bonds and commercial papers.

The borrowing program will use the shelf registration window of the SEC which allows issuers to register and sell under the same prospectus and other regulatory filing requirements a certain volume of securities that the company does not intend to use up right away. In the event that the oversubscription option is not fully exercised, the unused portion will be made part of the remaining bonds in the shelf to be used within a three-year period.

Megaworld’s proposed bond offer of up to P12 billion has obtained a triple-A rating from local credit watchdog Philippine Ratings Services Corp. (Philratings).

Obligations rated “PRS Aaa,” the highest rating assigned by Philratings, are deemed of the “highest quality with minimal credit risk.” The obligor’s capacity to meet its financial commitment on the obligation is deemed “extremely strong.”

Philratings had said that this credit rating took into account Megaworld’s “ample liquidity, the company’s sound capitalization and high-quality management, as well as expectations that Megaworld’s growth strategy will significantly benefit from the continued positive performance of the country’s economic growth drivers.”

“Cash from operations is expected to remain positive during the projected period 2016-2024, with funding for working capital and capital expenditures largely sourced from internally generated cash flows..Going forward, liquidity will be further bolstered by the increasing share of recurring rental income to revenues,” Philratings said.

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TAGS: Andrew Tan, MEG, Megaworld Corp., SEC
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