SMC Raises Up to P30 B from Fixed Income – Manila Bulletin
Diversified conglomerate San Miguel Corporation has filed a registration statement and preliminary prospectus with the Securities and Exchange Commission for the registration of P60 billion worth of fixed income bonds on the shelf.
In a notice to the Philippine stock exchange, the company announced that the bonds would be offered within three years at an issue price of 100 percent of the nominal value.
SMC has also submitted the tender add-on for the initial issue of up to 25 billion pesos of fixed income bonds with an overdraft option of up to 5 billion pesos.
The Philippine Rating Services Corporation (PhilRatings) has given the SMC proposed bond issue of up to 30 billion pesos the highest issue rating of PRS Aaa with a stable outlook.
The proceeds from the proposed bond issue will be used to refinance the short-term loans that SMC has taken to redeem its Series 2C and 2E Preferred Stock.
PhilRatings also retained its issuance rating of PRS Aaa with a stable outlook for SMC’s outstanding bonds of P. 90 billion.
Bonds with a PRS rating of Aaa are of the highest quality with minimal credit risk. The debtor’s ability to meet its financial obligations under the obligation is extraordinarily strong.
A stable outlook, on the other hand, indicates that the assigned rating is likely to be maintained or unchanged over the next 12 months.
PhilRatings said the ratings and outlook were given in light of the deeply anchored market leadership of SMC’s diversified business portfolio and the company’s highly experienced management team.
He also took into account the improved profitability of SMC, which was driven by the continued recovery of its core businesses; and its sufficient liquidity, supported by stable cash flow generation.
PhilRatings also noted that the proposed bond issue will not add any additional debt to this issue round as the proceeds will be used for refinancing.
The issue will also replace short-term borrowings, which will allow SMC to extend the life of its debt.
SMC continued its steady recovery and in the first nine months of 2021 recorded a 22 percent year-over-year increase in consolidated sales to P 650.6 billion. This was driven by continuous volume and sales growth in key business areas.
Given higher sales in the reporting period, combined with group-wide cost management initiatives and improved operational efficiency, consolidated operating income doubled from P 41.5 billion in the first nine months of 2020 to P 87.7 billion in the same period of this year.
Consolidated net income also tripled from P 10.7 billion to P 34.2 billion. Profitability margins and returns also improved.
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