SMB to raise $300 million from offshore loan market

MANILA, Philippines - San Miguel Brewery Inc., the flagship domestic brewery firm of diversifying conglomerate San Miguel Corp., is eyeing to raise $300 million from the offshore loan market, according to Reuters Loan Pricing Corp. (RLPC).

The fund-raising activity marks SMB’s debut in the offshore loan market. The loan will have a maturity of seven years.

RLPC reported that San Miguel has received proposals from 10 banks, six of which may likely get a mandate by the end of the year.

Just last week, SMB announced it has signed a deal to acquire the international beer business of its parent firm for $300 million.

Under the agreement, SMB will buy 100 percent of San Miguel Brewing International Ltd. with the transaction expected to be completed sometime end January 2010.

San Miguel is consolidating its brewery operations in its flagship unit so it can focus on new investments in infrastructure to propel growth.

SMB president Roberto Huang said the acquisition will allow the company to expand its footprint to a bigger and broader platform in Southeast Asia and China, and potential access to Kirin’s platform in other developed and emerging markets in Asia.

The Royal Bank of Scotland (RBS) was SMC’s sole financial adviser for the transaction. ING acted as an independent financial adviser for SMB.

SMB is 43.25 percent owned by Kirin, Japan’s second largest brewery after acquiring 665.02 million shares held by San Miguel in SMB for P58.9 billion or P8.841 each share.

SMB, which corners 95 percent of the Philippine beer market,produces and markets San Miguel Pale Pilsen, Red Horse, San Mig Light and five other affiliated brands.

To further boost sales, SMB will continue to expand its coverage in areas that are currently underserved. It also intends to take advantage of growing consumption in rapidly-urbanizing areas outside Metro Manila.

Instead of just looking at the beer segment, SMB is hoping to capture a larger share of the total alcoholic beverage segment as Red Horse is being positioned to attract more hard liquor consumers, thereby increasing its slice of the market.

The company successful completed a record-breaking P38.8 billion bond offering - the largest ever debt offering by a corporate issuer in the country.  Proceeds from the offering were used to purchase the domestic beer branda nd brewery land assets from San Miguel.