SMIC raises $150 M in sale of shares

MANILA, Philippines - Mall and banking conglomerate SM Investments Corp. (SMIC) has secured $150 million through an overnight equity placement to institutional investors.

Proceeds from the discounted share sale would be used for the debt management program of SMIC, an official said.

In a disclosure, SMIC said its board of directors “approved the placement of primary common shares worth $150 million to institutional investors via an overnight top up placement.”

Specifically, SMIC sold 7.25 million shares at P900 apiece, representing a 6.39-percent discount from the closing price of P961.50 on Thursday.

Shares of the conglomerate, which is led by Philippines’ richest man Henry Sy Sr., dropped 8.58 percent to end at P879 each yesterday. The heavy decline dragged the bellwether index, which retreated 1.91 percent to 6,533.95.

“The proceeds of the placement will be used to refinance some of the company’s existing obligations and for general corporate purposes,” SMIC said.

In a phone interview, SMIC investor relations chief Corazon Guidote said bulk of the fresh funds would be used to repay existing debts.

All buyers were foreign institutional investors, Guidote said, adding that robust demand prompted SMIC to upsize its equity offering to $150 million from the initial target of $100 million.

Guidote said the P900 selling price was arrived at given the average selling price of SMIC shares in the past several weeks. Shares of SMIC hit P838 apiece on July 9.

SMIC appointed UBS AG (Hong Kong branch) as the underwriter and placing agent.

“The placement will also further enhance the free float and liquidity of SMIC shares,” the company said.

Moving forward, the conglomerate has no plans yet to issue more shares.

“We don’t want to dilute shareholders,” Guidote said.

Issued and outstanding shares of SMIC rose to 796.012 million shares from 788.762 million shares.

SMIC’s financial assets, which have maturities of less than 12 months and used to meet its short-term liquidity needs, stood at P78.857 billion as of end-March. In contrast, financial liabilities with a maturity of less than one year is at P93.539 billion.

The listed firm said it also has available credit facility with banks and related parties.

SMIC allotted a record P65 billion for its capital expenditures this year, up from P56 billion in 2012, to support an annual profit growth of 12-15 percent for its  2013-2015 plan.

In the first quarter, net income of SMIC climbed 22 percent to P7.4 billion while revenues jumped 15 percent to P56.8 billion, driven by the surge in income of SMIC’s banking business and strong profit growth of the mall and property businesses.

From the first ShoeMart store that opened in 1958, the SM Group under holding firm SMIC has expanded into banking (BDO Unibank Inc.), shopping malls (SM Prime Holdings Inc.), retail (SM Retail Inc.) residential development (SM Development Corp.) and tourism and convention centers (SM Hotels and Conventions Corp.)