San Miguel gets SEC nod for P80-B share offering

The Securities and Exchange Commission has approved a landmark preferred shares offering by conglomerate San Miguel Corp. worth up to P80 billion, paving the way for the start of the issuance on Monday.

Based on documents from the SEC, as much as 1.07 billion new series of preferred shares will be offered at an issue price of P75 each.

The series 2 preferred shares will be peso-denominated, perpetual, cumulative, nonparticipative and non-voting and may be issued in sub-series or tranches. SMC has the option to redeem the preferred shares by the fifth, seventh or 10th year or otherwise pay a higher dividend rate.

The dividend rate annually on the sub-series (2-A) redeemable in five years is 7.5 percent and that on sub-series (2-B) redeemable on the 7th year is 7.625 percent. The sub-series redeemable in 10 years will be paid a dividend rate of 8 percent a year, the SEC documents showed.

Mandated as bookrunners for the offering were HSBC, Union Bank, BDO Capital, China Bank, RCBC Capital, First Metro Investments Corp., ING Bank, Philippine Commercial Capital Inc., Standard Chartered Bank, SB Capital and United Coconut Planters Bank.

The base offer will comprise 960 million shares with an option to upsize by 107 million shares.

The shares will be issued upon approval by the SEC of the increase in SMC’s authorized capital stock to P30 billion from P22.5 billion. The preferred shares will be listed and traded on the Philippine Stock Exchange.

As earlier reported, bulk of the proceeds would be used to redeem all of SMC’s existing P72.8 billion worth of series 1 preferred shares while the remainder would be for general corporate purposes, including partial repayment of short-term debt.

The new series of preferred shares, when redeemed, will not be considered retired and may be re-issued by SMC at a price to be determined by the board.

The offer period is expected to be completed by Sept. 14 and the company is targeting to list the preferred shares on Sept. 28, subject to approval by the PSE.

“The retail (market) is targeted especially now that SDAs (special deposit accounts) are getting close scrutiny of the BSP and so there’s no other alternative investment for retirees and those dependent on regular cash flow from their placement,” one of the bookrunners said.