In a disclosure to the Philippine Stock Exchange, Ayala said the loans were arranged/funded by BDO Capital Corp., First Metro Investment Corp., Insular Investment and Trust Corp. and China Banking Corp.
The notes shall have a maturity of seven years and fixed interest rate of 10.375 per annum. They shall be clean of any security, and subject to an optional redemption by the company beginning from the fourth year anniversary date from issue.
The funds raised will be used to prepay Ayala’s dollar obligations maturing in 2006 consistent with its debt refinancing program.
"The company thought of tapping the market to improve risk profile of its liabilities by increasing the peso component of its debt by lowering funding cost and extending maturities of its obligations given the liquidity in the system and the lack of sufficient investment outlets, "Ayala treasurer Ramon G. Opulencia said.
The new borrowing will further improve the debt mix of the company from 58 percent US dollar and 42 percent peso at the start of the year to an estimated 40 percent and 60 percent ratio in favor of peso-denominated debt.
Opulencia said the conglomerate has $200 million in cash to address the requirements of maturing loans up to next year.
Ayala remains committed to paring down its debt to sustain continued growth and allow it to build new businesses. The company, through AC Capital, is looking at new businesses with strong growth prospects.
As of end 2004, Ayala had consolidated cash balance of P24.4 billion, more than double the year ago level of P10.52 billion, mainly due to asset sales including the divestment of its five percent stake in Globe Telecom.
Net debt at the end of 2004 was $646 million, lower than last year’s $734 million. Of this amount, 58 percent comprised of US dollars and the balance of 42 percent are in pesos.
Ayala owns two-thirds of the country’s biggest property firm, Ayala Land; more than a third of the second-biggest lender Bank of the Philippine Islands; and 35 percent of number two phone firm Globe Telecom.