Globe seeks to raise P17B from discounted rights issue
Globe Telecom is pricing its stock rights offering (SRO) at a discount, allowing it to raise as much as P17 billion for its broadband network expansion.
The Ayala unit announced Friday that the final price for the SRO involving the sale of 10.12 million shares was at P1,680 apiece for a 22.6-percent discount.
“Pricing at a higher discount is usually indicative of tepid risk appetite among investors, which is understandable given ongoing market volatility. It is also worthy to note that despite the discount, gross proceeds will still amount to P17 billion, in line [with the] … preliminary prospectus,” China Bank Securities director Rastine Mackie Mercado said.
Globe earlier said the offer price would be given a discount of 18 percent to 25 percent based on its volume-weighted average price (VWAP) as of Septr 8.
“With a final offer price of P1,680, representing a 22.6-percent discount on its [VWAP], it’s attractive to encourage investors to participate in Globe’s SRO. After all, the actual discount is situated on the upper bound of the discount range given by the firm,” Regina Capital Development Corp. head of sales Luis Limlingan said.
Debt repayment
The SRO, the first in over two decades, will be carved out of the recent increase in Globe’s authorized capital stock.
Offer period will run from Oct. 3 to Oct. 7. Listing is targeted for October 28.
Aside from financing its broadband network, proceeds would also be used for debt repayment.
Globe had earlier downsized the equity offering after entering into a sale and leaseback agreement for its towers.
Fitch Group unit CreditSights estimated that Globe’s entire tower deal would amount to P80 billion to P90 billion. Globe has so far sold 5,709 out of its over 7,000 towers for P71 billion.
Credit profile
Limlingan had said the SRO would make Globe’s “balance sheet healthier.” And with the tower agreements, CreditSights also sees Globe’s credit profile improving in the next six months.
“[We] believe that Globe’s modest EBITDA (earnings before income, tax, depreciation and amortization) growth and cash infusion from its tower sale and equity rights issue should provide solid financial buffer for capex funding and deleveraging,” it added.
In the first half, Globe grew its net income by 49 percent to P19.65 billion from P13.04 billion a year ago. This was supported by its consolidated service revenue, which rose by 4 percent to P78.9 billion for the period.
The telco has earmarked P89 billion for capital expenditures this year. It spent P50.5 billion in the first semester, the bulk of which was for its data business.
