San Miguel power unit issuing $300-M bonds

MANILA, Philippines - The power unit of diversified conglomerate San Miguel Corp. (SMC) is raising $300 million worth of offshore bonds to bankroll new power projects and other funding needs.

In a disclosure to the Philippine Stock Exchange yesterday, SMC said SMC Global Power Holdings Corp. has successfully priced an issuance of Reg S, unrated perpetual non-call 5.5 years $300-million undated subordinated capital securities.

“Following investor meetings in Singapore and Hong Kong as well as calls with investors in London, SMC Global Power launched and subsequently priced the deal at 6.75 percent,” the company said.

SMC said bulk will be offered to Asian investors and the balance will be covered by European investors.

“Final allocations saw the majority of the deal distributed into Asia at 87 percent, with European investors taking the remaining 13 percent.” it said.

The food-to-infrastructure conglomerate said the proceeds of the offshore bonds will be used to finance investments in power-related assets, including its greenfield power projects, and general corporate purposes.

The joint lead managers and joint bookrunners on the transaction are Australia and New Zealand Banking Group Ltd. (ANZ), Bank of America Merrill Lynch, DBS Bank Ltd., Deutsche Bank, Hongkong & Shanghai Banking Corp. Ltd. (HSBC), ING Bank, Mizuho Securities and UBS AG.

SMC Global mandated the foreign banks to arrange a roadshow in Singapore and Hong Kong, as well as investor calls in Europe starting Aug. 17.

The offshore bonds is an alternative capital-raising activity to the shelved initial public offering (IPO) on the local stock exchange, analysts said.

In May 2014, SMC shelved the $750-million IPO of its power generation unit as it secured fresh financing through bond issuances.

The San Miguel power unit has been raising capital to finance its expansion, with a goal of hitting 1,200 megawatts of generating capacity in Mindanao.

In a separate disclosure, SMC said its board has approved the terms and conditions for the 446.67 million preferred shares to be sold in three sub-series.

It said the approved initial dividend rate for subseries 2-D is 5.9431 percent per annum; subseries 2-E is 6.3255 percent per annum; and subseries 2-F is 6.8072 percent per annum.

The SMC board also finalized the step up rate for each subseries.

For the subseries 2-D, the step up rate is.”the average of the closing rates of the 10-year PSDT-R2 for three consecutive days ending on and including the fifth anniversary from the issue date as shown on the PDEX page of Bloomberg plust three percent per annum,” if not redeemed on the fifth year.

If the subseries 2-E is not redeemed on the seventh year, the step up rate is,” the average of the closing rates of the 15-year PSDT-R2, which rate, if not existing on the date of redemption, shall be dertermined by interpolation on a straight line basis, based on the 10-year PDST-R2 rate and the 20-year PDST-R2 rate, for three consecutive days ending on and including the seventh anniversary from the issue date as shown on the PDEX page of Bloomberg plus three percent per annum.”

For the subseries 2-F, the step up rate is,” the average of the closing rates of the 20-year PSDT-R2 for three consecutive days ending on and including the 10th anniversary from the issue date as shown on the PDEX page of Bloomberg plus three percent per annum” if not redeemed on the 10th year.