SMC redeems P6.7B worth of preferred shares

Conglomerate San Miguel Corp. (SMC) is redeeming about P6.7 billion worth of preferred shares as part of an ongoing plan to refinance older and costlier capital notes.

In a disclosure to the Philippine Stock Exchange on Monday, SMC issued the notice of redemption of the outstanding and issued series 2 preferred shares–sub-series D (SMC2D) shares at P75 a share.

There are about 89.33 million such outstanding SMC2D shares.

This is in line with SMC’s plans to raise cheaper money from the a new series of preferred shares within the next three years, taking advantage of the drop in local interest rates to record-low levels.

SMC2D preferred shares, which carry a dividend rate of 5.9431 percent, were issued in 2015. If SMC will not exercise its option to redeem the preferred shares, it will have to pay higher rates.

The ongoing COVID-19 pandemic has prompted the Bangko Sentral ng Pilipinas to embark on an aggressive monetary easing. This as the country has slipped into an economic recession for the first time since 1998.

Last month, SMC unveiled plans to raise as much as P40 billion from the issuance of a new series of preferred shares within the next three years. The initial offering is worth up to P20 billion.

SMC plans to offer as much as 266.67 million preferred shares “series 2” at an offer price of P75 a share.

For the shelf registration of as much as P40 billion, SMC earlier obtained board approval to issue as much as 533.33 million series 2 preferred shares over a three-year period. INQ