San Miguel said Friday it plans to sell 1.07 billion series 2 preferred shares at PHP75 each. The offer period is expected to end on Sept. 14, with the shares likely to be listed on the Philippine Stock Exchange by Oct. 12.
Hongkong and Shanghai Banking Corp. Ltd. has been appointed sole issue manager for the deal, and 10 local and foreign financial institutions are joining HSBC as bookrunners.
San Miguel said it will use the proceeds to redeem PHP72.79 billion of existing preferred shares. It may also use PHP5.66 billion to partially repay PHP13.99 billion in short-term debt.
The company issued the existing batch of preferred shares to investors in exchange for their common shares back in October 2009 in a bid to ease their concerns about San Miguel's plans to diversify into heavy industry. Under the terms of that deal, San Miguel had the exclusive option to redeem the shares after three years.
The company will issue the new batch of preferred shares in three tranches. Tranche A will have a cash dividend rate of 7.50%, with a step-up rate of 3% over the yield of 10-year government securities in the secondary debt market if not redeemed on the fifth year after issuance.
Tranche B's cash dividend is 7.625%, with a step-up rate of 3% over the yield of 15-year government securities in the secondary debt market if not redeemed on the seventh year after issuance. Tranche C carries an 8.0% cash dividend rate, with a step-up rate of 3% over the yield on 20-year government securities in the secondary market if not redeemed on the 10th year after issuance.
Write to Cris Larano at cris.larano@dowjones.com
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