Jollibee to issue preferred shares to buy back $250-M debt

Homegrown fast-food giant Jollibee Foods Corp. (JFC) plans to buy back $250 million out of its $600 million inaugural perpetual bonds issued early last year using a portion of proceeds from a maiden preferred shares offering.

For the first time in its history, JFC plans to raise at least P8 billion to as much as P12 billion from the sale of perpetual preferred shares, targeted for September this year. This will also be the first time that an issuer from the food service industry will offer perpetual preferred shares to the domestic capital market.

The perpetual bonds to be partly redeemed had been issued through wholly owned Jollibee Worldwide Pte. Ltd. in January 2020, or shortly before the pandemic hit the Philippines. It carried an annual interest rate of 3.9 percent.

During an annual meeting last week, JFC’s shareholders approved the creation and issuance of preferred shares as part of an overall plan to strengthen JFC’s balance sheet.

JFC will file an application with the Securities and Exchange Commission for the shelf registration of up to 20 million peso-denominated, cumulative, nonvoting, nonparticipating, nonconvertible and redeemable perpetual preferred shares.

The offer, which will have a shelf period of three years, will be priced at P1,000 per share, for a total amount of P20 billion.

The P8 billion toP12 billion offering will be the first tranche. The base offer will consist of eight million preferred shares with an oversubscription option of up to four million shares.

The initial issuance may be issued in one or two series and may have step-up dividend rates if they are not redeemed on the third or fifth anniversary from the issue date, according to JFC.

These preferred shares will come from the reclassification of existing authorized and unissued common shares. Thus, they will not increase the total number of authorized shares in JFC’s equity base.

“Once all are executed by December 2021, JFC would have fewer debt obligations, more distributed financial maturities over the next few years, lower foreign exchange risks and better leverage and debt servicing ratios,” JFC said in a statement.

The group plans to open about 450 new stores this year and at least 500 new stores per year in the next few years, returning to its prepandemic pace of rolling out stores.

Meanwhile, JFC elected two new Singaporeans to the board: Kevin Goh and Ee Rong Chong. This is the first time there are foreigners and also a female member (Chong) on the board. INQ