SMC brewery unit to issue P20B worth of bonds

MANILA, Philippines—Cojuangco-led San Miguel Brewery Inc. (SMB) plans to issue as much as P20 billion worth of peso-denominated bonds to refinance obligations that are falling due next year.

In a disclosure, the company said the issuance was approved by its board in a meeting on Tuesday.

“The bond issuance will have a minimum tenor of five years and the proceeds thereof will be used to refinance the tranche of peso-denominated fixed-rate bonds issued by the company in 2009, maturing in 2012,” SMB said in a disclosure.

In 2009, the company sold P38 billion worth of bonds to be paid in three tranches: three, five and 10 years. The proceeds were used to buy property, beer brands and other intellectual property rights from parent San Miguel Corp.

Series A of the SMB bonds amounting to P13.59 billion will mature in 2012. Series B worth P22.40 billion will mature in 2014 while Series C, amounting to P2.81 billion, will mature in 2019.

Last year, local debt watcher Philippine Ratings Services Corp. (PhilRatings) kept its triple-A rating—the highest grade the ratings firm gives out—for the beer giant’s bond issue, citing the company’s established position in the market.

In its disclosure, SMB said its board also “delegated to management the authority to determine, negotiate and finalize the terms and conditions of the issuance, including the interest rates and listing thereof.”

SMB is 51 percent owned by San Miguel Corp. and 48.4 percent by Kirin Holdings Co. Ltd. (Kirin).

In 2010, SMB acquired parent San Miguel Corp.’s international beer business subsidiary, San Miguel Brewing International Limited (SMBIL).

In the first half of the year, higher beer volumes in both domestic and international markets, and SMB’s effective sales initiatives boosted its consolidated revenue by 7 percent to P35.6 billion. SMB’s operating income likewise rose by 8 percent to P10.2 billion.

Earlier this year, SMB announced plans to open four new bottling plants in Laguna, Isabela, Bicol and Cagayan de Oro worth about $100 million to expand its production capacity by nearly a third.

SMB is also in talks with Kirin to dilute their combined stake in order to comply with the 10 percent minimum public float required by the Philippine Stock Exchange.