SM Prime plan to sell P100B in debt paper OKD

Property giant SM Prime Holdings Inc. (SMPH) has obtained regulatory clearance to sell as much as P100 billion worth of debt paper over a three-year period, gaining flexibility to fund more shopping malls and other big-ticket property projects.

For the first tranche, SMPH plans to raise as much as P20 billion from an offering of five- and seven-year bonds. The base offer is P15 billion but the Sy family-led firm has the option to upsize by up to P5 billion.

In a statement on Wednesday, the Securities and Exchange Commission (SEC) said it had approved SMPH’s application to issue these debt securities under a three-year shelf registration as well as the selling permit for the first tranche.

Under the shelf registration window of the SEC, securities to be issued in tranches may 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.

For the first tranche, the bonds will be issued in minimum denominations of P20,000 and in multiples of P10,000 thereafter. They will be listed and traded on local fixed income trading platform Philippine Dealing & Exchange Corp.

SMPH may redeem in whole the five-year bonds at 101 percent on the sixth and seventh interest payment dates or at 100.5 percent on the eighth and ninth interest payment dates. Meanwhile, it may redeem the seven-year bonds at 101 percent on the 10th and 11th interest payment dates or at 100.5 percent on the 12th and 13th interest payment dates.

Proceeds from the offering will primarily finance capital expenditures for new malls and expansion projects.

BDO Capital & Investment Corp., China Bank Capital Corp., BPI Capital Corp., East West Banking Corp., First Metro Investment Corp., RCBC Capital Corp. and SB Capital Investment Corp. have agreed to act as joint lead underwriters for the offer.

SM Prime may issue the remaining debt securities under its shelf-registration in tranches within three years from the effective date of the registration statement.

Last December, SMPH received the much-awaited green light from the city of Pasay for a 360-hectare reclamation project, in line with its plan to build a new central business district along the Manila Bay area. This new reclamation project in Pasay City will be connected to the Mall of Asia complex, which is also a reclaimed land project of both parties, and has since then been developed into a thriving estate with a massive shopping mall, offices, residences, entertainment arena, five-star hotel and convention center.

SM Prime also hopes to undertake a 300-hectare reclamation project in Parañaque.

SM Prime chair Henry Sy Jr. earlier said he was keen on doubling the Manila Bay reclamation project spanning coastal areas of Pasay and Parañaque to 1,200 hectares. —DORIS DUMLAO-ABADILLA