SM Prime in P7B loan for expansion binge

The country’s largest shopping mall developer SM Prime Holdings Inc. plans to raise as much as P7 billion early next year from a syndicated loan facility to fund expansion in the Philippines and mainland China.

SM Prime chief finance officer Jeffrey Lim told reporters Wednesday night that the company had mandated three banks—foreign banks ING and ANZ, and local bank Rizal Commercial Banking Corp.—to arrange a syndicated loan facility.

The facility will be worth at least P5 billion but can be upsized to P7 billion, Lim said.

A mix of tenors is being considered, including five-, seven- and 10-year loans, to spread out SM Prime’s debt maturities, he explained.

With ample liquidity in the financial system, raising funds through syndicated lending is seen to be less tedious compared to the issuance of retail bonds.

Lim said SM Prime was expected to sign the syndicated facility very soon as drawdown was targeted for the first quarter of 2012.

Proceeds from the syndicated loan will help cover SM Prime’s P21-billion capital spending budget for next year. It was earlier announced that P12 billion of this budget would be invested locally while the remaining P9 billion would be for the group’s growing shopping mall chain in China.

SM Prime is now in talks with the Chinese government to build its eighth shopping mall in Xinxiang located in northern Henan Province. Lim said SM Prime was negotiating to buy a five-hectare property.

The group now has four operating malls in mainland China located at Xiamen, Jinjiang, Chengdu and Suzhou. It is constructing three more—in Chongqing, Zibo and Tianjin.

Construction in the latest location, Xinxiang, is expected to start within two years, Lim said. Xinxiang, which has a population of close to six million, is an important manufacturing and farm production base of Henan province.

With this, the company is expected to benefit from China’s booming economy.

In the Philippines, SM Prime inaugurated earlier this year SM City Masinag in Antipolo City, and was scheduled to open SM City San Fernando in Pampanga, SM City Olongapo in Zambales, and SM Marketmall in Dasmariñas, Cavite, before the year’s end.

SM Prime is expected to have 48 malls in the Philippines and China with an estimated combined gross floor area of 5.9 million square meters by the end of this year.

Next year, SM Prime will open three new local malls—in Gen. Santos; Lanang, Davao; and Consolacion, Cebu.