SEC okays AMA’s P1.5-B IT ed bonds

The Securities and Exchange Commission (SEC) has cleared the proposed issuance by AMA Computer University Inc. and AMA Education Corp. of P1.5-billion worth of IT education bonds.

The SEC exempted the sale of securities from the registration requirements, thus fasttracking the bond issuance.

In documents filed with the SEC, the AMA group said the five-year, zero-coupon bonds will be sold to no more than 19 investors, qualifying the issuance for exemption from registration.

The bonds will target institutional investors such as trust funds, pension funds, retirement funds, thrift banks and other asset managers.

The bonds will have a fixed yield with a price ceiling of 100 percent as quoted in MART 1 five-year fixed rate Treasury note (FXTN), plus an indicative premium of 1.75 percent.

MART 1 is a daily price quotation of debt papers by the Money Market Association of the Philippines, used as a secondary benchmark for interest rates.

The bonds will also be exchangeable into tuition credits with AMA. The borrowers also have a greenshoe option, or an option to increase the size of their borrowings by P500 million depending on market demand for the bonds.

Out of the P1.5-billion proceeds, an estimated P300 million will be set aside for regional expansion. The group is looking at expanding in what it considered high-growth markets such as China, Laos, and Vietnam next year. It already has schools in Bahrain and Brunei.

Another P300 million has been earmarked for AMA Telepolis, an information technology university on a 50-hectare property in General Trias, Cavite. The project is estimated to cost P2.4 billion over a period of five years.

The AMA group has also allotted P200 million for its local expansion, as it is planning to build seven new branches. The balance will, meanwhile, be used to improve existing AMA branches.

First Metro Investment Corp. (FMIC) , a unit of banking giant Metropolitan Bank and Trust Co., is the lead underwriter for the planned offering.

The bonds are exchangeable to tuition fee credits up to a maximum of 50 percent of the face value on each school year starting 2005 to 2007.

A zero coupon bond, a debt paper usually sold at a deep discount from its face value, does not require the issuer to make periodic interest or coupon payments to bondholders. But it pays a large premium to bondholders when the bond matures.