SMC shares offering starts

Conglomerate San Miguel Corp. launched on Monday a retail offering of preferred shares worth as much as P80 billion. This is the single largest capital raising activity in the country to date.

The offering of the new series of SMC preferred shares will run until Sept. 14 while the listing on the Philippine Stock Exchange is slated for Sept. 28, a bookrunner said.

SMC is set to hold a roadshow in Metro Manila on Tuesday, Cebu on Wednesday and Davao later this week.

The Securities and Exchange Commission last week approved the registration of 1.067 billion in new SMC preferred shares offered at an issue price of P75 per share.

The series 2 preferred shares will be peso-denominated, perpetual, cumulative, nonparticipative and nonvoting.

The preferred shares will be offered in three sub-series redeemable on the 3rd, 5th year and 7th year, and every dividend payment thereafter or SMC will pay a higher interest rate. The “step-up” rate will be effective on the 5th, 7th and 10th year if the shares are not redeemed by then.

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

The dividend rates on SMC preferred shares were priced 275 basis points higher than the benchmark local interest rate for the five-year and seven-year series and 300 basis points higher on the 10-year series, a bookrunner said.

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 is composed of 960 million shares with an option to upsize by 107 million shares.

The preferred shares will be issued upon approval by the SEC of the increase in SMC’s authorized capital stock from P22.5 billion to P30 billion.