Ayala Land alters capital structure

MANILA, Philippines—Property giant Ayala Land Inc. has mapped out a capital restructuring program to obtain leeway to take in more foreign investors in light of a more stringent Supreme Court ruling on the definition of “equity.”

A company disclosure on Tuesday said ALI’s board approved a resolution to increase its authorized capital stock, issue P13.04 billion in voting preferred shares and retire the same amount of outstanding non-voting preferred shares.

The company said this was to “comply with the regulatory requirement on Filipino ownership following the Supreme Court’s recent ruling that non-voting shares do not count as equity when computing for a company’s Filipino ownership level.” This was in turn based on the high court’s ruling on the PLDT case based on a petition filed by the late human rights lawyer Wilson Gamboa.

In line with this, ALI seeks to amend its charter to allow the redemption of the preferred shares and to reclassify 1.96 billion unissued preferred shares to voting preferred shares.

ALI said the P13.03 billion voting preferred shares would be issued to common shareholders through a stock rights offering on a pro-rata basis under the same basic terms as the outstanding preferred shares.

As the Supreme Court’s ruling redefined equity for purpose of compliance with the 40-percent foreign equity limit in key industries like property and utilities, ALI’s move to amend its charter is seen as a crucial step for the company to get its share of foreign investment inflows that are lifting the local stock market to unprecedented highs.

If its outstanding preferred shares are included as part of equity, ALI currently has a foreign ownership of 20 percent, based on data provided by ALI. But based on the Supreme Court’s ruling that non-voting preferred shares are not counted as part of equity, 38 percent of ALI is held by foreign investors, thus nearing the maximum level.

Meanwhile, ALI has also mandated BPI Capital and HSBC to arrange a retail bond offering worth of up to P15 billion with a tenor of seven and 10-years, proceeds from which will cover part of the property firm’s record capital spending this year.