SMC to issue record P80-B preferred shares

MANILA, Philippines - San Miguel Corp. (SMC) has obtained the Securities and Exchange Commission’s nod to issue up to P80.025 billion worth of preferred shares to institutional and retail investors.

The offering is expected to be the largest capital-raising program ever in the local market.

Based on documents filed with the SEC, the diversified conglomerate will issue 960 million new Series 2 preferred shares priced at P75 apiece to raise P72 billion. It has set aside another 107 million Series 2 preferred shares in case of strong demand.

Including the overallotment option, the issue is expected to fetch total proceeds of P80.025 billion.

The shares, to be issued in up to three sub-series, will have a fixed dividend rate of 7.5 percent to eight percent per annum.

The offer period will run from Aug. 13 to Sept. 14.

The shares will be listed on the Philippine Stock Exchange not later than Oct. 12, subject to compliance with PSE requirements and the approval by the SEC of the increase in the company’s authorized capital from P22.5 billion to P30 billion.

Proceeds from the offering will be used to redeem the company’s existing P72.8 billion Series 1 preferred shares. These shares were issued in 2009 to stockholders who agreed to convert their common shares to preferred shares.

Other proceeds will be chanelled to general corporate purposes which may include partial repayment of short-term debt.

As of end-June this year, SMC had short-term debt of P13.995 billion.

The Series 2 preferred shares will be peso-denominated,perpetual, cumulative, participating and non-voting and may be issued in tranches. They may be convertible into common shares of the company.

SMC has appointed The Hongkong and Shanghai Banking Corp. as sole issue manager while Union Bank of the Philippines, BDO Capital & Investment Corp., China Banking Corp., RCBC Capital, First Metro Investment Corp., ING Bank N.V. Manila branch, Philippine Commercial Capital, Standard Chartered Bank, SB Capital & Investment, and United Coconut Planters Bank will serve as joint bookrunners for the issue.