Ayala Corp to issue up to P10-B bonds to fund expansion plan

MANILA, Philippines - Conglomerate Ayala Corp. (AC) will issue up to P10 billion worth of 10-year multiple putable bonds to raise funds for its expansion.

In a disclosure to the Philippine Stock Exchange yesterday, AC said its board approved the sale of P6-billion putable bonds with an over-allotment option of as much as P4 billion.

The bonds will be sold at par or 100 percent of face value through a public offering to be handled by BPI Capital Corp.

The bondholders shall have put options of five and eight years from issue date. The put option on the fifth year is up to 10 to 20 percent of the principal amount of the bonds held while the put option on the eighth year is for up to 80 to 100 percent of the principal amount of the bonds held.

AC said its Preferred B shares shall be redeemed at a redemption price equal to the issue price plus all accrued and unpaid dividends up until July 21, 2011 based on the dividend rate of 9.4578 percent per annum.

The highly-diversified conglomerate is spending P79 billion for the continued expansion of its business units. The capital budget is 21 percent higher than the amount spent in 2010, reflecting the group’s optimism on the country’s growth prospects.

AC is raising its capitalization by more than 50 percent from P37 billion to P56.2 billion to give it enough elbow room to fund new business opportunities.

The capital hike would be done by increasing the number of common shares from 596 million to 900 million with a par value of P50, as well as creating 40 million Series C Preferred shares with a par value of P100.

The preferred shares are redeemable, non-convertible, non-voting and have preference over common shares.

AC is keen on venturing into power and infrastructure development as it positions itself for future growth.

The company is planning to participate in the Aquino administration’s public-private partnership (PPP) program where around 80 infrastructure-related projects worth P740 billion will be auctioned off hopefully within the year.

The conglomerate was also earlier reported to be scouting for opportunities in the field of renewable energy.

Through wholly-owned unit Michigan Power Inc., AC teamed up with Diamond Generating Asia Ltd. (DGA), a subsidiary of Mitsubishi, to explore opportunities in the field of solar power in the Philippines. 

Under this joint venture, Michigan and DGA agreed to form PhilNewEnergy Inc. which will undertake the exploration and pre-development of possible solar projects in the Philippines. The joint venture company is 60 percent owned by Michigan Power and 40 percent by DGA.

Michigan made its first bid to break into the power generation business by partnering with Metro Pacific Investments Corp. (MPIC) and First Gen Corp. in acquiring the 246-megawatt Angat hydroelectric power plant in Norzagaray, Bulacan. The consortium, however, lost in the bidding.

AC has investments in property through Ayala Land Inc., telecommunications (Globe), banking (Bank of the Philippine Islands), water distribution (Manila Water), electronics manufacturing (IMI) and business process outsourcing (LiveIt).

       The capital hike will also cover AC’s planned 20 percent stock dividend to all common stockholders as of a record date yet to be fixed.

The stock dividend will be paid not later than 18 trading days from the record date.