JG Summit unit to issue $150-M fixed-rate notes

JG Summit Holdings Inc. announced yesterday that its offshore subsidiary, JGSH Philippines Inc., will issue five-year fixed rate notes amounting to $150 million to pay off maturing obligations.

JG Summit assistant corporate secretary Rosalinda Rivera said in a disclosure report to the Philippine Stock Exchange that JP Morgan Europe Ltd. has been tapped as sole book runner and issue manager for the notes offering.

Rivera said JG Summit will act as guarantor of the notes. The board of directors of JG Summit has already authorized management to determine the extent of the company’s participation as guarantor as well as to finalize terms and conditions of such guarantee.

Proceeds from the issue will be used to refinance debts maturing this December. The proposed issuance is being made to take advantage of the low interest rate environment, JG Summit said.

JG Summit’s last venture in the debt market was in January 2002. The company issued $100 million worth of four-year bonds with coupon of 9.25 percent. The bond issue was arranged by ING Barings.

Buoyed by the strong performance of its food, real estate and financial services businesses, profits of JG Summit jumped by 56 percent in the first quarter of the year to P920.83 million.

Excluding non-recurring gain from the recovery in value of investments amounting to P241.6 million, JG Summit’s first quarter profits would have amounted to only P679.2 million or a 15-percent increase over the same period last year.

Consolidated revenues rose nine percent to P12.8 billion, largely due to the impressive performance of its petrochemicals business, which contributed P1.42 billion to the group’s total revenues for the first quarter of 2003.

Food pumped in P6.06 billion in revenues while air transportation chipped in P1.38 billion. Real estate and hotels, on the other hand, contributed P926.55 million to total revenues.

The Gokongwei-owned holding company said improved revenues in air transportation and textiles were also the sources of the increased revenues. However, these gains were partially reduced by the 16.7-percent drop in revenues from its telecommunications subsidiary, Digital Telecommunications Philippines Inc. (Digitel). Lower interest income likewise contributed to the drop.

Operating expenses went up by 10.94 percent to P11.97 billion from P10.79 billion, largely due to Cebu Air’s expanded flight operations and the start of commercial operations of Digitel’s wireless service "Sun Cellular".