Jollibee completes P12-B preferred shares offering

Homegrown fast-food giant Jollibee Foods Corp. (JFC) has raised the curtain for preferred shares as a fund-raising option for restaurant chains with the completion of its P12-billion preferred shares offering, which was warmly received by the local capital market.

The offering was oversubscribed by 3.11 times the base offer of eight billion shares which were sold at P1,000 per share, JFC president Ernesto Tanmantiong said during the ceremony marking the listing of the preferred shares on the Philippine Stock Exchange (PSE) on Thursday.

JFC sold P12 billion worth of preferred shares, including the overallotment option of four billion shares. Series A carries an interest rate of 3.2821 percent a year until the third year, while series B carries 4.2405 percent for the first five years. Interest rates will be adjusted upward after their synthetic maturity dates.

“The event is truly momentous for us. The listing of the preferred shares is not only a first for the Jollibee Group of companies, it is also the first for the food service industry in the Philippines,” Tanmantiong said.

Retail investors

This marks JFC’s return to the local capital market after its 1993 initial public offering.

He said retail investors accounted for the vast majority of the subscription to these preferred shares.

“The loyalty of Jollibee’s customers was also reflected from the overwhelming demand for the shares and allowed them to price at the tightest end,” said Eduardo Francisco, president of BDO Capital Investment Corp., which is among the joint lead underwriter and bookrunner with BPI Capital Corp. (issue manager), China Bank Capital Corp. and SB Capital Investment Corp.

Strengthening balance sheet

For the first tranche, part of the net proceeds will be used for the partial redemption of JFC’s senior perpetual securities. This will allow JFC to retire US dollar perpetual bonds and reduce other obligations which will strengthen its balance sheet and eliminate foreign exchange exposure. The rest of the proceeds will fund capital expenditures for its commissary and new store expansion.

“The success of the preferred shares offering reflects the confidence that investors have in the company’s leadership and management,” PSE chair Jose Pardo said during the listing ceremony. “Despite the challenging global environment, there is no stopping the growth and expansion of JFC.”

“This follow-on offer of JFC is a reminder to all listed company that may need funds for acquisition or capital expenditures that the stock market will always be an available avenue for capital raising,” Pardo added.