San Miguel seeks $2-B new loans

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) is looking to pay off its debts through new loans, the company told the local stock exchange yesterday.

The debt refinancing program aims to “prudently manage its capital and balance sheet structure by taking advantage of the opportunities presented by prevailing market conditions,” SMC said.

SMC said it is seeking roughly $2 billion through bank loans.

Specifically, the company plans to raise $1 billion through five-year loans to repay the $1-billion, five-year funding it secured from banks in 2010. It is also looking at generating $300 million for its working capital.

SMC was reportedly in talks with Deutsche Bank and Standard Chartered Bank to draw a $650-million, one-year loan to buy back $600-million exchangeable bonds due next year.

Last week, the food-to-power conglomerate announced its plan to buy back $600 million worth of convertible bonds listed on the Singapore Exchange Securities Trading Ltd.

In May 2011, SMC allotted 189.12 million common shares from its treasury stock for the $600 million exchangeable bonds due on May 5, 2014. Bondholders may exchange the bonds into common shares worth P137.50 each from June 15, 2011 to April 28, 2014.

Local firms are tapping banks to pay debts early or lengthen the maturities of their debts amid the low interest rate environment.

The Bangko Sentral ng Pilipinas’ policymaking Monetary Board retained last week the overnight borrowing and lending rates stayed at record lows at 3.5 percent and 5.5 percent, respectively, amid a benign inflation outlook.

As of end-September last year, SMC recorded P237.874 million in current liabilities that are due in the next 12 months and P400.907 billion in long-term liabilities. Of these, P112 billion and P201.24 billion are short and long-term debts, respectively.

In the nine months to September, SMC’s net earnings surged 61 percent to P19.2 billion, mainly due to foreign exchange gains and increased contributions from its power generation unit.

SMC is into power (SMC Global), beer (San Miguel Brewery Inc.), packaging (San Miguel Yamamura Packaging Corp.), liquor (Ginebra San Miguel Inc.), petroleum (Petron Corp.), food and beverage (San Miguel Pure Foods Co. Inc.), airline (Philippine Airlines) and infrastructure projects.