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SMC investors agree to bonds, notes amendments

/ 05:16 AM December 28, 2019

Conglomerate San Miguel Corp. (SMC) has obtained consent from the majority of its Philippine bond and corporate note investors to amend the creditors’ covenant, seeking to align the terms of older debt securities with newer ones.

In a disclosure to the Philippine Stock Exchange (PSE), SMC said it had completed the consent solicitation for its fixed-rate corporate bonds and notes held on Nov. 22 to Dec. 18 this year.

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Consent solicitation, a common practice in the bond market, is usually sought if the original terms of the issuance are no longer deemed to be in the best interest of the issuer and bond holders. The issuer may approach the bond holders through a consent solicitation statement and bondholders who agree to the changes may receive a payment.

Based on SMC’s disclosure to the PSE, 56.19 percent of the holders of the 4.8243 percent per annum series A due 2022, 5.2840-percent series B bonds due 2024 and 5.7613-percent series C bonds due 2027 approved the changes.

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Furthermore, 60.93 percent of holders of the 5.1923-percent series D bonds due 2022, and 55.8 percent of holders of 6.25-percent series E bonds due 2023, 6.625-percent series F bonds due 2025 and 7.125-percent series G bonds due 2028 gave their consent.

Meantime, all investors of the two-year 5.25-percent fixed-rate corporate notes due 2020 also agreed to the changes.

The supplemental trust agreements to reflect the changes were executed on Dec. 26.

SMC had said the objective was to align the provisions of the debt securities with those of the recently issued P10-billion retail bond and the recently contracted $1.75-billion syndicated term loan facility.

The debt securities are listed and traded on local fixed income platform Philippine Dealing & Exchange Corp.

In November, the holders of SMC’s $800-million 4.875-percent bonds due 2023 also approved changes in their notes and trust deed.

These changes would give SMC the leeway to manage its debt stock. The firm is embarking on various big-ticket infrastructure projects such as Metro Railway Transit-Line 7 (Quezon City to Bulacan railway) and the Bulacan airport project.

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Recently, SMC set up a medium term notes (MTN) program worth $3 billion, seeking to boost its funding pool for big-ticket infrastructure projects. Its board of directors approved the issuance of an initial tranche of $500 million worth of perpetual securities out of this program.

SMC had also obtained approval from its board to raise as much as P60 billion by offering short-term commercial papers in various tranches in the next three years.

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TAGS: fixed-rate corporate bonds, Philippine Stock Exchange (PSE), San Miguel Corp. (SMC)
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