SMC returns to capital market, to raise P10B from preferred shares

Conglomerate San Miguel Corp. (SMC) has returned to the capital market for the second time this year with a fresh offering of preferred shares worth at least P10 billion, proceeds of which will boost its funding for airport and other big-ticket infrastructure projects.

The offering of perpetual preferred shares—which started yesterday and will run until Dec. 1 this year—forms SMC’s series 2-K preferred shares. The issuance can be increased to P20 billion in case of oversubscription.

The proceeds of this offer will be used for additional investments in SMC’s airport and airport-related projects, in banking arm Bank of Commerce, and for refinancing existing obligations.

SMC is offering 133.33-million cumulative nonvoting, nonparticipating, nonconvertible and redeemable preferred shares out of its authorized capital stock at P75 per share.

The preferred shares will carry a fixed dividend rate of 4.5 percent a year, lower than the 4.75 percent a year dividend rate on P20 billion worth of series 2-K preferred shares issued by SMC last October.

Each application should be for a minimum of 500 offer shares, and thereafter, in multiples of 100 offer shares.

The joint issue managers, joint lead underwriters and book runners are BDO Capital & Investment Corp., China Bank Capital Corp., PNB Capital and Investment Corp., RCBC Capital Corp. and SB Capital Investment Corp.

Philippine Commercial Capital Inc. is a colead underwriter and joint book runner while PNB Capital and Investment Corp. is the joint issue manager for trading participants.

Bank of Commerce and BPI Capital Corp. are the selling agents, along with trading participants of the Philippine Stock Exchange Inc.

Although the preferred shares are perpetual, they have a synthetic maturity of up to five years. If SMC does not redeem the preferred shares on the fifth year, the conglomerate will have to pay a higher interest rate. SMC, however, has the option to redeem the series 2-K in whole, but not in part, by the third year at the earliest.

Last October, SMC also raised P20 billion from an offering of preferred shares to fund big-ticket infrastructure projects.

A total of 266.67-million preferred shares were sold to the retail, institutional and trading participants also at P75 each. This was the initial tranche under SMC’s shelf registration of up to 533.333 million series 2 preferred shares that the Securities and Exchange Commission has approved for offering within a period of three years.

Apart from the brand-new New Manila International Airport that SMC is building in Bulacan province, the conglomerate is currently building Mass Rail Transit 7. INQ