JG Summit raises P9 billion from bond offer

MANILA, Philippines - JG Summit Holdings Inc., the holding firm for the various businesses of the Gokongwei family, has successfully raised P9 billion from a recent bond offering.

JG Summit said the fixed-rate bonds maturing in five years and one day, generated strong demand from both institutional and retail investors, prompting it to raise the issue size to P9 billion from the originally planned P5 billion.

 “The strong investor demand for our retail bond once more validated the local market’s confidence in the JG Summit Group” said James L. Go, the company’s chairman and chief executive officer.

The bonds were priced tightly at 8.25 percent per annum, despite a number of competing corporate issuances in the market. ING Bank N.V. Manila Branch and SB Capital Investment Corp. were the joint issue managers and lead underwriters for the bond offering.

The bond issue was issued a PRS Aaa rating, by domestic rating firm PhilRatings, which means that such obligations “are of the highest quality with minimal credit risk and that the obligor’s capacity to meet its financial commitment on the obligation is extremely strong.”

JG Summit, one of the largest and most diversified conglomerates in the country, is a holding company for a group of companies which includes Universal Robina Corp. (branded consumer foods, agro-industrial and commodity food products), Robinsons Land Corp. (property development and hotel management), Digital Telecommunications Philippines Inc. (telecommunications), Cebu Air Inc. (air transportation), JG Summit Petrochemicals Corp. (petrochemicals) and Robinsons Savings Bank (banking services).

Proceeds from the bond offering will be used to support the capital expenditure requirements of Digitel (P6 billion to P8 billion) and Cebu Air (P2 billion to P4 billion).

Digitel is the country’s third largest provider of wireless telecommunications services through Digitel Mobile Phils. Inc. (DMPI), the corporate vehicle for the Sun Cellular brand.

DMPI is currently in the middle of its network expansion, which includes of 3G cell site roll-outs in NCR, North Luzon and VisMin. It has projected total capital expenditure of $280 million by the end of the year, $222 million in 2010, $184 million in 2011.

Cebu Air, on the other hand, has earmarked around P4 billion this year and P4.9 billion in 2010 to support its fleet expansion program. It signed a purchase agreement for up to 20 additional new Airbus A320-200 aircraft comprising of 15 firm orders and five purchase options. The 15 firm orders are scheduled to be delivered starting 2010. 

The Cebu Pacific airline will take delivery of two more ATR 72-500 turboprop aircraft in the fourth quarter of 2009 to cater to domestic destinations with smaller airports.

JG Summit also intends to use a portion of the proceeds for investments in short-term instruments such as special savings, trust accounts or fixed income bonds, until such time that the funds need to be deployed for capital expenditure requirements of subsidiaries.