San Miguel Corporation (SMC) disclosed that it recently registered a planned issue of P10 billion worth of fixed-rate bonds with the Securities of Exchange and Commission. Initially, the proceeds will be used to redeem preferred shares. This is just one of what SMC written on its preliminary offer supplement. The other options are to use the proceeds for refinancing or re-denomination of its current loan obligation. Now that we are aware of the plan of SMC to issue bonds in the coming months, let’s take a look at some of the essential information you must know as an investor.
Catch me in my live training events! (quick plug)
The heart of why I do these seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more about how you could time the market check out the trainings below.
For the first option of redeeming a preferred share issue, the plan of SMC is to initially fund it through a bridge loan. In fact, it put the amount at P6,782,115,000 by October of this year. For the refinancing or re-denomination of its current loan obligation, the estimated amount is P3,093,935,000 and it will be given out within 6 months from its issue date. Since these are just the initial purposes and its still pending plans, SMC is thinking to invest the net proceeds it will get from the offer in short-term liquid investments such as short-term government securities, money market placements, and bank deposits. These are expected to earn at prevailing market rates.
The company also expects that there will be investment losses and should there be any shortfalls, the Company is ready to finance it from its internally generated funds. This new bond offering is already the 4th offer and the last portion of the P60-billion fixed-rate bonds shelf registration of SMC to be issued. It will be used on October 4 this year and will be due by 2024. The bonds will be issued in P50,000 minimum denominations with P10,000 integral multiples. It will also be traded in the denomination of P10,000 in the secondary market. SMC disclosed all of this information in order to educate investors about its last tranche its total bond offering.
SMC has a plan to issue the bond offering to retail and institutional investors in the Philippines through a public offering. It will be done through the joint lead bookrunners and underwriters. For those who are wondering if it has an international offering, the firm said it excludes any international offer. The period of the offering is set from September 23 to 27. Per the rating of Philratings, the bonds is at PRS Aaa rating. It can be noted that during the second quarter of this year, SMC’s net income fell by 5% but this doesn’t mean that the firm is not performing well. With the progressing economy and easing inflation rate, SMC will eventually bounce back.