Ayala Corp to raise P15B in preferred shares sale

Ayala Corp [AC 703.00, up 1.5%; 77% avgVol] [link] revealed that it will sell up to 7.5 million Class “B” Preferred Shares (ticker: APB3R) at a price of P2000/share, for a total raise of up to P15 billion. The APB3R shares will have an initial dividend rate of 6.0538%. The offer period will run from October 1 through October 7, with a listing tentatively scheduled for October 15. AC plans to use the proceeds to redeem P15 billion in other preferred shares that will become callable in late November.

MB BOTTOM-LINE: The success of the Petron [PCOR 2.71, up 4.6%; 171% avgVol] follow-on offering is probably a good signal/indicator that there will be more preferred shares offerings like this one in the near future. This is a case of good debt hygiene; AC is using the market’s thirst for locking in higher pre-cut yields to refinance some of its outstanding obligations at a lower rate. Feels like a little bit of late spring cleaning, as they also sold off 3,070,150 treasury common shares in a block sale at P720/share to raise an additional P2.2 billion. AC still has over 12 million treasury shares–worth approximately P8.6 billion at current market prices–that it can sell at any time the need arises.  

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