Ayala, San Miguel units raising over P51-B for expansion plans

Katherine Visconti
Local conglomerates Ayala Corp. and San Miguel Corp. are raising an aggregate of up to P51 billion via equity and debt instruments for their expansion plans in 2012.

MANILA, Philippines – Local conglomerates Ayala Corp. and San Miguel Corp. are raising an aggregate of up to P51 billion via equity and debt instruments for their expansion plans in 2012.

In separate disclosures to the stock exchange, the following said they will be raising these funds:

  • P8 billion to P10 billion in fixed rate retail bonds with 15 year term for Ayala Corp.
  • P20 billion bond sale with 5- to 10-year terms for San Miguel Brewery Inc.
  • $500 million loan for San Miguel Corp.  


Ayala bonds

The Ayala group Corp. had earlier said it will be pumping up capital expenditure this year by 38% to a record P91 billion. The majority of the planned funds will go to investments into real estate, nework modernization, their water business and acquistions.  

As part of its fund raising, the Philippines’ oldest conglomerate told the exchange on Wednesday, March 14, that its board had approved an P8 billion to P10 billion fixed-rate retail bond offer with a maturity of up to 15 years. 

In a text message, Ayala Corp treasurer Ramon Opulencia said proceeds of the bonds will be earmarked for “additional working capital for new investments and prepayment of debt.”

BPI Capital Corp. was tapped as the issue manager of the bonds, which shall be issued in scripless form in denominations of at least P50,000 and in multiples of P10,000 thereafter. The bonds will be issued at 100% of face value and priced based on the applicable PDST-R2 plus spread.

The historic company has diversified beyond its simple roots as a gin and rum distiller but hasn’t expanded nearly as fast as rival San Miguel Corp., which expanded from a single-product brewery to become one of the Philippines’ largest power producers and its biggest oil refining and marketing company.

Critics have considered Ayala overly conservative.

The company diversified into banking, telecommunications and just last year into roads. Ayala Land won the first road project that was bid out under the Aquinio administration’s Public-Private Partnership Program and Zobel told Bloomberg Businessweek they want to invest in airports and rail projects in areas where they can construct more malls and homes.
  
San Miguel bonds

Meantime, San Miguel Brewery, a unit of the San Miguel group and Japanese firm Kirin, had set interest rates for its planned P20 billion bond sale.

The beer unit of San Miguel Corp. said its board agreed to price its bonds as follows:

  • 6.05% interest rate for the 5-years-and-a-day Series D bonds
  • 5.93% for the 7-year Series E bonds
  • 6.6% for the 10-year Series F bonds


In 2011, credit watcher Philippine Rating Services Corp. gave a triple-A credit rating — the highest rating in its scale — on the brewery firm’s upcoming retail bond offering.

SMB earlier tapped BDO Capital & Investment Corp., HSBC, SB Capital Investments Corp., Standard Chartered Bank and ING Bank N.V. as joint book runners and lead managers for the peso-denominated debt paper sale.

San Miguel loan

Diversifying conglomerate San Miguel Corp. is also seeking funds for the road projects it had with new partner, Citra Group of Indonesia.

In a disclosure on Wednesday, March 14, it confirmed to the exchange that previous reports on plans to avail of a $500 million loan are accurate.
 
“We advise that the Company (San Miguel), together with the Citra Group of Indonesia, are in talks with a consortium of banks who have offered to arrange and extend financing arrangements for the tollway projects jointly undertaken by the Company and the Citra Group”

San Miguel and Citra have inked a partnership for various road projects that compete with the Metro Pacific Investment Corp., which is led by businessman Manuel V. Pangilnan.

This includes the elevated road connecting the North Luzon and South Luzon expressways (NLEx and SLEx). – Rappler.com