Ayala Corp prefs sale already underway

Ayala Corp [AC 570.00 ?1.9%; 55% avgVol] [link] has already started to sell its reissued Class “B” Preferred Shares [ACPB4] that will look to list on June 19 after an offer period that will run until June 9. The preferred shares cost P2000.00/share, and come with a dividend rate of 6.2903%. AC is looking to sell 5 million ACPB4 shares as part of its firm offer, with an oversubscription option of up to an additional 5 million ACPB4 shares, for a total fundraise of up to P20 billion, assuming the full sale of both the firm offer and oversubscription. The shares being sold are coming out of AC’s treasury, as these were previously redeemed.

  MB BOTTOM-LINE:  There’s not a lot to say about this kind of debt transaction. AC plans to use 100% of the base offer proceeds (~P10 billion) to repay a short-term loan that it has with BPI. That number goes up to P12.8 billion (assuming full sale of the oversubscription option). The proposed use of up to P7 billion to invest in its subsidiary, AC Energy and Infrastructure Corporation (ACEIC), which ACEIC will in turn use to participate in the stock rights offering of another AC subsidiary, ACEN [ACEN 2.46 unch]. If you think that interest rates are going to be coming down soon (and hard), then maybe this kind of yield is something that will interest you? It seems like a debt juggling transaction configured to appeal to the institutional crowd. That statement sounds negative, but it’s not meant to be a call-out. It’s not important for every investment opportunity to appeal to every market participant. It’s important for every participant to have the same access to every opportunity.

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