Globe Telecom has slashed its stock rights offer (SRO) to P17 billion from the initial proposal of P32 billion following the expected cash inflow from its tower sale and leaseback agreement.
The Ayala-led company told the Inquirer on Tuesday that the P15-billion reduction in the SRO was in consideration of the “proceeds from the tower sale to ensure we are efficient in terms of cash management.”
“When we originally announced the P32 billion [offer], tower sale was not yet envisioned,” the listed firm added.
Fitch Group unit CreditSights estimated that Globe’s entire tower deal would amount to at least P80 billion to as much as P90 billion. So far, Globe has sold 5,709 out of its over 7,000 towers for P71 billion via two deals.
Divestment
Globe expects the first closing of both deals, which have a leaseback period of 15 years each, this quarter.
Despite the reduction in transaction size, Regina Capital Development Corp. head of sales Luis Limlingan said “this doesn’t change the fact that the proceeds of the SRO will primarily be used to make the balance sheet healthier and the expressed support from its principal shareholders still stand.”
Globe’s SRO, the first time in over two decades, will be issued out of the increase in the authorized capital stock.
Use of proceeds
Proceeds will fund its mobile and broadband network expansion and debt repayment. This year, Globe has earmarked P89 billion worth of capital expenditures.
Based on its preliminary offer term sheet, the rights offer period is slated on Oct. 3 to 7. The new shares to be sold to existing shareholders will be listed on Oct. 28.
The sole global coordinator, domestic lead underwriter and joint bookrunner of the transaction is BPI Capital Corp. The domestic co-lead underwriter is PNB Capital and Investment Corp. while the sole international underwriter and joint bookrunner is UBS AG Singapore Branch.
Globe saw its net income in the first half rise by 49 percent to P19.65 billion from last year’s P13.04 billion, supported by consolidated service revenue which grew by 4 percent to P78.9 billion.