Listing of SMC preferred shares OK’d

The Philippine Stock Exchange board approved on Wednesday the listing of P80 billion worth of new preferred shares issued by conglomerate San Miguel Corp., the single-largest capital-raising activity in the country so far.

In a memorandum, the PSE said the 1.067 billion worth of series 2 preferred shares recently sold by SMC after a monthlong offering would be listed on Friday, September 28, which is on tack to the company’s schedule.

This assures investors of an exit mechanism ahead of SMC’s redemption of the perpetual preferred shares.

SMC’s series 2 preferred shares are peso-denominated, perpetual, cumulative, non-participative and non-voting and may be issued in sub-series or tranche.

The preferred shares are redeemable starting on the third year, fifth year and seventh year and every dividend payment thereafter, otherwise, SMC will pay a higher interest rate. The “step-up” rate will be effective on the fifth, seventh and 10th year, respectively, 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 seventh year is 7.625 percent. The sub-series with a step-up rate in 10 years will be paid a dividend rate of 8 percent per year.

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