Conglomerate San Miguel Corp. seeks to boost its funding pool for big-ticket infrastructure projects by setting up a medium term notes (MTN) program worth $3 billion.
SMC also obtained approval from its board to raise as much as P60 billion by offering short-term commercial paper in various tranches in the next three years.
For the offshore debt paper, SMC board has approved the issuance of an initial tranche of $500 million worth of perpetual securities out of this program, the company disclosed to the Philippine Stock Exchange on Thursday.
The MTN program and initial issuance of perpetual securities will both be registered at the Singapore Exchange, the disclosure added.
SMC said the program would be available for the medium term and allow it to tap the financial market for funding through the issuance of securities, including but not limited to corporate notes, bonds and perpetual securities and other similar instruments at different currencies, whether considered debt or equity for accounting purposes
“The establishment of the program will give the company ready access to funding and will give the company the flexibility to fund its contemplated investments and projects such as the MRT 7 (Quezon City to Bulacan railway) construction, the Bulacan airport project, as well as the refinancing of its existing obligations and for other general corporate purposes,” the disclosure said.
All instruments and securities that will be issued out of the program will be exempt securities which will not be required to be registered with the Philippine Securities and Exchange Commission.
With such MTN program, an issuer like SMC can generate constant cash flows from debt issuance, typically with tenors of five to 10 years. This will allow the company to tailor its borrowing to meet its financing needs.
These securities can be continuously offered to investors through a dealer, with investors being able to choose from differing maturities. As such, they are different from bonds because they can be offered to investors by the issuer’s agent instead of being underwritten by investment banks and then sold to the public in a tranche.
Meanwhile, SMC plans to issue as much as P20 billion as the initial tranche of the short-term commercial paper—or those with maturity of less than one year—out of the shelf registration to be filed with the SEC. The base offer is P15 billion but there will be an option to upsize by P5 billion.
The short-term commercial paper will be listed with the local fixed income trading platform Philippine Dealing & Exchange Corp.