San Miguel, Lopez holding firm pare down debt
Two of the country's biggest business groups announce moves to reduce their debts and take advantage of favorable market conditions

MANILA, Philippines – Two of the country’s biggest business groups announced on Friday, February 8, moves to reduce their debts.

In separate disclosures to the stock exchange, diversified conglomerate San Miguel Corp. announced it has completed buying back in cash almost half of its US$600 million exchangeable bonds, while Lopez-led holding firm First Philippine Holdings Corp (FPHC) said it will retire P7.48 worth of debt stock.

San Miguel said that after it began a tender offer for the $600 million bonds on January 29, it repurchased on February 7 its $259.20 million worth of bonds due in 2014 for $280.61 million. This was based on a 107.75% clearing price and interest due until settlement date.

This leaves only $332 million still outstanding from the total bonds it raised in 2011, when it was beefing up its war chest with an almost $1 billion bond-stock financing for its entry into non-food businesses. 

San Miguel explained it is “proactively addressing its existing liabilities to prudently manage its capital and balance sheet structure by taking advantage of prevailing favorable market conditions.”

Lopez debt

This was the same reason the Lopez family’s holding firm gave for its board’s decision to redeem all its outstanding 43 million Series B preferred shares issued in 2008 and which will mature this 2013. The shares have a peso value of P4.3 billion.

As part of efforts to pare down debt servicing cost, First Philippine Holdings Corp. will also pre-pay remaining 7- and 10-year fixed rate corporate notes worth P3.18 billion.

FPHC issued the preferred shares in 2008 with a dividend rate of 8.7231%. The proceeds were used to refinance outstanding debts, fund strategic business acquisitions, and finance capital and operation requirements.

FPHC earned an P11.62 billion attributable net income in the first 9 months of 2012, 17 times higher than the P637 million a year ago.

It gained P6.084 billion from sale of its 2.66% stake in power retailer Manila Electric Co. (Meralco) and the assignment of Rockwell Land shares from Beacon Electric to the FPHC group during the period. Its geothermal energy investments via unit First Gen Corp. lifted company revenues by 14% to P59.3 billion. –

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