SMC lists P80-B preferred shares
MANILA, Philippines—Diversifying conglomerate San Miguel Corp. listed on the Philippine Stock Exchange on Friday P80 billion worth of a new series preferred shares, the largest capital market foray in the country to date.
SMC listed 1.067 billion series 2 preferred shares that were recently sold to retail and institutional investors at P75 each. Bulk of the investment comprising 67.6 percent flowed to the sub-series 2A with an annual dividend rate of 7.5 percent that carries a step-up rate in five years. This was listed under the ticker “SMC2A.”
About 23.9 percent of the issue consisted of sub-series 2C – listed under ticker “SMC2C” that carries an annual dividend rate of 8 percent with step-up provision in 10 years. The remaining 8.5 percent consisted of sub-series 2B under ticker “SMC2B” that carries an annual dividend rate of 7.625 percent and a step-up provision on the 7th year.
In a statement, SMC said this landmark capital-raising was completed as investors were seeking higher yields in a low-interest environment.
This listing gives investors the option to buy or sell the preferred shares at the secondary market ahead of SMC’s redemption of these instruments.
The preferred shares are peso-denominated, perpetual, cumulative, non-participating and non-voting. SMC has the option to redeem these shares starting the 3rd, 5th and 7th year and every dividend payment thereafter or otherwise pay a higher rate (step-up provision).
“Our presence today points to our company’s commitment as an active participant in the capital markets and a value creator for the many investors who hold San Miguel shares or bonds,” SMC president and chief operating officer Ramon Ang said in a press statement.
Ang thanked lead underwriter HSBC, the financial community and the investing public for giving San Miguel a vote of confidence. He also credited three factors crucial to the issue’s success, namely the “robustness of the Philippine capital markets and prevailing business optimism, the draw of our company as an attractive investment option, and the coming together of all institutions to create what’s been the game changer for our capital markets.”
From its stable core food, packaging and beverage businesses, San Miguel has embarked on a diversification program in 2007 and has since gained a foothold in high-yielding industries including energy, fuel and oil, infrastructure, airlines and mining.
“Ever since we embarked on our diversification strategy in 2007, our goal has been to make a deep and lasting positive impact on the Philippine economy through our businesses. San Miguel can play a pivotal role in hastening our country’s growth. The fast-changing industries that we have chosen to participate in are challenging, but they also provide us the greatest opportunities to stay ahead of the curve, grow even further and make a difference,” Ang added.
Bulk of the proceeds from the series 2 preferred shares issuance will be used for the redemption of the company’s outstanding series 1 preferred shares with the balance to be utilized for general corporate purposes, including short-term debt repayment.
HSBC was the lead issuer for this transaction while bookrunners included Union Bank, BDO Capital, China Bank, RCBC Capital, First Metro Investment, ING, PCCI, SB Capital, Standard Chartered Bank and UCPB. Participating underwriters were Insular Investment Corporation and PNB Capital and while the selling agents were Bank of Commerce and trading participants of the PSE.
Meanwhile, SMC’s beer unit San Miguel Brewery is set to list P3 billion worth of bonds on the Philippine Dealing & Exchange Corp. on Oct. 3.
These series D bonds form part of the P20-billion fixed rate bonds registered with the Securities and Exchange Commission and issued by SMB last April 2.
