Ayala rechannels part of share sale proceeds for debt servicing

MANILA, Philippines - Ayala Corp. (AC), the country’s oldest conglomerate, is reallocating a portion of the proceeds from a planned preferred share offering earlier intended to fund infrastructure projects.

In its amended registration statement filed with the Securities and Exchange Commission (SEC), AC said it expects to use net proceeds from the re-issuance and offering of up to 30 million preferred Class B shares solely to “refinance certain peso denominated obligations.”

AC was earlier eyeing to use a portion of the proceeds, expected to reach P15 billion, to partly fund projects of units AC Energy Holdings Inc. and AC Infrastructure Holdings Corp.

AC said the principal amount of debt obligations to be repaid by the company stands at P12.95 billion.

Such debt obligations include bank loan to BDO (P10 billion), bank loan to Metrobank (P1.46 billion), and corporate notes from various lenders that include The Philippine American Life and General Insurance Co., Philplans First Inc., Philam Bond Fund, Inc., and Government Service Insurance System (P1.49 billion).

“The terms of each of these debt obligations have provisions that allow for prepayment by Ayala of outstanding amounts prior to their final maturity,” AC said.

“Ayala expects to apply the proceeds toward such pre-payments within 12 months from the listing date. To the extent that the net proceeds exceed the total, such excess will be used for general working capital of Ayala. Correspondingly, if the net proceeds are less than the total, Ayala will satisfy the balance from internally generated funds and/or other credit facilities including bank borrowings as Ayala considers commercially favorable at the relevant time, “ the conglomerate added.

AC is still waiting for the SEC approval for the preferred share issuance. The offering of up to 30 million preferred Class B shares will be offered at P500 per share.