SM Prime prepares bond offering to raise P10B

Property giant SM Prime Holdings Inc. (SMPH) plans to raise as much as P10 billion via a new offering of fixed-rate bonds to buttress its expansion program.

In a disclosure to the Philippine Stock Exchange, SMPH said its board has approved the issuance of up to P5 billion in fixed-rate retail bonds with a maturity of 10 years. There would be an oversubscription option of up to P5 billion, it said.

The board also authorized the management to negotiate and finalize the terms and conditions, including pricing, tenor and any increase in issuance amount as well as execute any and all documents necessary to implement the retail bond issue.

The offering is part of a P60 billion fund-raising program through a shelf registration mechanism approved by SMPH’s board for the next three years.

Shelf registration allows an issuer to register and sell under the same prospectus and other regulatory filing requirements a certain volume of securities that the issuer does not intend to use up right away. The Securities and Exchange Commission gives the issuer a three-year window within which to sell the securities.

The shelf registration allows a company to schedule its offering in order to avoid risks when financial markets are volatile. This also allows the issuer to complete all the tedious paperwork and lay the groundwork for a future issuance and immediately go to market once conditions become favorable.

SMPH, one of the largest property firms in the Southeast Asian region, has committed to earmark P60 billion for capital outlays annually for the next three years.

It aims to double its net income to P32 billion by 2018.

The group is also continuing its expansion in China while evaluating opportunities elsewhere in the Southeast Asian region.