Jollibee offers to buy back $250M worth of offshore notes
Fast-food giant Jollibee Foods Corp. (JFC) is set to retire up to $250 million or 41.6 percent of the perpetual securities issued early last year, when it debuted in the offshore bond market, to replenish its war chest after taking over American specialty chain Coffee Bean & Tea Leaf.
In a disclosure to the Philippine Stock Exchange on Tuesday, JFC said its wholly owned subsidiary, Jollibee Worldwide Pte. Ltd. (JWPL), had launched on Monday a tender offer for up to $250 million of its $600-million guaranteed senior perpetual capital securities issued in January 2020 and listed on the Singapore Exchange Securities Trading Ltd.
The offer to buy these securities for cash will expire on Nov. 3 unless extended or terminated by JWPL.
“The tender offer is part of JFC’s liability management strategy to strengthen its balance sheet,” the company said.
The tender offer is conditioned on the settlement and listing of up to 12 million peso-denominated perpetual preferred shares concurrently being offered by JFC to finance the buyback of these offshore securities. This exercise is targeted to raise as much as P12 billion.
JFC will advance the money to JWPL to partially fund the tender offer.
“Once the issuance of the preferred shares and the partial buyback of the guaranteed senior perpetual capital securities are completed along with other actions related to financing and financial management by December 2021, JFC expects to have fewer debt obligations, more distributed financial maturities over the next few years, lower foreign exchange risks and better leverage and debt servicing ratios,” the company said.
All these actions are seen to support JFC’s capability to sustain profitable growth and accelerate its global expansion in the next few months and years.
JFC’s $600-million offshore issuance last year marked its very first foray into the capital market since its initial public offering in 1993. The perpetual note issuance is also one of the first by an Asian restaurant company. The securities were issued by JWPL at a rate of 3.9 percent a year for the first five years, proceeds from which were used to settle short-term debt arising from the acquisition of The Coffee Bean & Tea Leaf, which was completed in September 2019.
Meanwhile, JFC recently closed its offering of preferred shares in two series. Series A carries a dividend rate of 3.2821 percent a year for the first three years, after which JFC will have to pay higher rates based on the prevailing seven-year benchmark plus a spread of 4 percentage points. Series B carries a dividend rate of 4.2405 percent a year for the first five years, after which JFC will have to pay higher rates based on the 10-year benchmark plus a spread of 4 percentage points.
JFC said the issuance of the preferred shares would not affect its annual cash dividend policy of paying out 33 percent of attributable net income.
This 2021, JFC plans to open 450 new stores across various restaurant brands here and abroad. A record-high capital expenditure of P12.2 billion was set.
