SMC raising $2B under medium-term note program

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) is raising $2 billion in fresh capital through the issuance of dollar-denominated notes.

The food-to-power firm has created a medium-term note program to pay existing debts.

“The current limit of the company is up to $2 billion and under the medium-term note program of the company, subject to compliance with legal and contractual requirements, may from time-to-time issue debt securities,” SMC said.

SMC said it mandated Australia and New Zealand Banking Group Ltd., DBS Bank Ltd., Deutsche Bank AG, Merrill Lynch (Singapore) Pte. Ltd. and Standard Chartered Bank as lead managers and bookrunners for the notes offering.

Last month, SMC said it tapped five banks to raise $1.3 billion through a long-term syndicated loan for debt refinancing.

The conglomerate said it already secured an approval in-principle from Singapore Exchange Securities Trading Ltd. (SGX-ST) “for permission to deal in and quotation of any notes, which are agreed at the time of issue to be listed on the SGX-ST.”

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 earlier said.

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.

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

The diversified conglomerate is continuing with its aggressive expansion program, this time training its eyes abroad.

SMC is undergoing a five-year, $34.83-billion investment plan that will make it the largest investor in the Philippines. The conglomerate said it will spend an average of P283.52 billion every year until 2017.

From its core brewery and food business, SMC has expanded into power production (SMC Global Power Corp.), downstream oil sector (Petron Corp.), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport and Skyway.

Its net income surged 57 percent to P27.6 billion last year. In 2011, profits sank 13 percent to P17.5 billion on the absence of non-recurring gains.