SMC allots $280M for 1st tranche of bond buyback

MANILA, Philippines - Several holders of San Miguel Corp.’s $600-million convertible bonds have agreed to book in their gains as the diversified conglomerate prepares to spend $280 million to buy back a portion of the bonds from lenders as part of its debt refinancing program.

“The aggregate principal amount of the bonds accepted by the company for repurchase on Feb.7 is $259.2 million,” SMC said in a disclosure to the stock exchange.

“The price at which the company is repurchasing the bonds accepted for repurchase, expressed as a percentage of each $200,000 principal amount of the bonds is 107.75 percent,” it added.

Hence, SMC said it will pay bondholders $280.61 million in cash, which includes accrued but unpaid interest.

Late last month, SMC announced its plan to buy back $600 million worth of convertible bonds listed on the Singapore Exchange Securities Trading Ltd.

SMC said the bond buyback program is in line with the board of directors’ approval authorizing management “to refinance its existing financial obligations under such terms and conditions which are favorable and advantageous to the company.”

In May 2011, SMC allotted 189.12 million common shares from its treasury stock for the $600-million exchangeable bonds due on May 5, 2014.

Holders of the bonds, which carry an interest rate of two percent, may exchange the bonds into common shares worth P137.50 each from June 15, 2011 up to April 28, 2014.

As of Jan. 18, 2013, SMC had issued 2.412 million of the 189.12 million common shares it allocated for the conversion of bonds to shares.

“The aggregate principal amount of the bonds that will remain outstanding following the completion of the invitation to tender is $332 million,” SMC said.

SMC’s board of directors earlier approved the conglomerate’s refinancing plan.

As of end-September 2012, SMC recorded P237.874 million in current liabilities due in the next 12 months and P400.907 billion in long-term liabilities. Of these, P112 billion and P201.24 billion are short and long-term debts, respectively.

In the nine months to September last year, SMC’s net earnings surged 61 percent to P19.2 billion, mainly due to foreign exchange gains and increased contributions from its power generation unit.

Consolidated sales revenues jumped 29 percent to P509.2 billion in the nine-month period on higher sales of SMC Global Power Corp. as well as favorable selling prices for its branded products.

SMC is into power (SMC Global Power Corp.), beer (San Miguel Brewery Inc.), packaging (San Miguel Yamamura Packaging Corp.), liquor (Ginebra San Miguel Inc.), petroleum (Petron Corp.), food and beverage (San Miguel Pure Foods Co. Inc.), airline (Philippine Airlines) and various infrastructure projects.