San Miguel seeks SEC approval for P80B fund-raising plan

San Miguel Corp. has sought the Securities and Exchange Commission’s approval for its plan to offer preferred shares worth as much as P80 billion, which would be the largest fund-raising activity in the local capital market.

In a registration statement filed with the SEC, the conglomerate unveiled a plan to offer 960 million to a maximum of 1.07 billion new preferred shares at a maximum price of P75 per share. This will bring the deal size to between P72 billion and P80 billion.

SMC has also mandated British banking giant HSBC the sole issue manager for the landmark offering, which will run from August 7 to 31 this year. The shares will be listed on the Philippine Stock Exchange in October, SEC documents showed.

Proceeds from the offering will be used by SMC to refinance existing preferred shares worth P72.8 billion. The first series of preferred stocks, which targeted shareholders who opted for fixed returns instead of sharing in the risks from SMC’s diversification, was also issued at P75 per share in 2009.

For its part, the government holds 753.8 million preferred shares of SMC. They were originally common shares (equivalent to 24 percent of total) but were converted into preferred shares, which SMC has the option to redeem this year.

Following an affirmation from the Supreme Court that these assets belong to coconut farmers, the government is now technically free to sell its SMC preferred shares, analysts said.

At the same time, SMC will be able to lower its debt-servicing cost by redeeming outstanding preferred stocks and avoid incurring higher rates under a “step up” feature on these preferred stocks.

SMC currently pays 8 percent per year to holders of those preferred stocks.—Doris C. Dumlao