Ayala Corp seals $100-M five-year loan facility

Ayala Corp. will tap several foreign banks to finance its capital expenditures for the next 12 to 18 months starting with a $100-million five-year loan facility sealed Thursday last week in Hong Kong, a top-ranking official of the company told The STAR over the weekend.

"These are committed credit lines. The intention is not to draw immediately but to have them ready when we needed them," the official, requesting anonymity, said.

The official said tapping bank loans right now is cheaper than issuing bonds abroad as yields have gone up with the plan of the US Federal Reserves to raise its interest rates by another 25 basis points. The Fed has been raising interest rates gradually to slow down the growth of its economy and prevent a rise in the inflation rate.

He stressed that the firm does not need the funds right now.

"These are normal treasury operations (to finance) the (firm's) requirement in the next 12 to 18 months and there are no immediate needs," he said.

Ayala Corp. has to finance about P20 billion in capital expenditures this year, bulk of which (around P16 billion) will go to its subsidiary, Globe Telecommunications.

Earlier, the company said it plans to issue common X shares to raise funds. The plan was approved by its shareholders in April last year. However, unfavorable condition in the local equities market prevented the firm from issuing the shares. Its issuance has been temporarily shelved until the market recovers.

He said they have been receiving various proposals from several local and foreign financial institutions for the company's capital raising activities.

"Our strategy in fund raising? First of all, we always maintain an open-mind. Everytime institutions come to us with proposals, we study them. We raise money when the markets are receptive. We don't try to go out if the market is not receptive because most of the time your efforts will not pay off," he explained.

He said the firm has always adopted a conservative approach in its borrowings.

"Even before the crisis set in, all our loans were long-term (five to seven years in maturity)," he said. We keep stretching it (maturity of debt). Maybe next time around, we will do something in the 10-year area," he said.