Ayala Corp to issue P1-B preferred shares

Ayala Corp., one of the country’s oldest Philippine conglomerates, intends to issue to the public P1-billion worth of redeemable preferred shares next year to raise general working capital and refinance debts.

In a registration statement filed with the Securities and Exchange Commission, Ayala Corp. said it will offer 200 million preferred A shares with a par value of P1 per share. The shares will be issued at P5 per share and are redeemable in three years.

The preferred shares have preference over the company’s common shares in the payment of dividends and in the distribution of assets in case of dissolution and liquidation. They are cumulative, non-convertible into common shares, non-voting and do not have any pre-emptive rights to any share issue of the company.

Ayala Corp. said dividends on the preferred shares shall be payable annually in arrears.

Tapped to lead underwrite the issue was Citicorp Capital Philippines Inc.

Ayala Corp. said proceeds from the offering will be used for general corporate purposes such as meeting its debt service requirements and funding expenditures.

As of end-September this year, Ayala had total long-term debt of P42.08 billion or $803 million. Of the total, P31.905 billion is owed to banks and other financial institutions and the remaining P1 billion forms part of a syndicated term loan due 2005.

The company’s short-term debt, on the other hand, amounted to P4.64 billion or $89 million, of which P215 billion belonged to banks.

Ayala Corp. currently has four billion preferred A shares, of which one billion are issued and outstanding.

Ayala Corp. is the holding company of the Ayala Group of Companies, the largest conglomerate in the Philippines. Its business activities are divided into four sectors, namely real estate and hotels; financial services; telecommunications; and international operations and others.

Members of the Zobel de Ayala family, individually and through their control of Mermac Inc., a private holding company incorporated in the Philippines, hold 58.2 percent of Ayala Corp. as of Sept. 30, 2002.

Apart from the Ayalas, other major shareholders of Ayala Corp. are the Mitsubishi Group, which holds a 15.1-percent stake and Shoemarket Inc. (4.3 percent), having first acquired interests in Ayala Corp. in 1974 and 1980, respectively.

Striving to build a long-term competitive foundation, Ayala Corp. earlier implemented a corporate reorganization to allow it to build new business more aggressively and to develop a portfolio that maximizes opportunity for growth.

In view of rapid globalization, the holding firm will forge strategic alliances to enhance financial and operational capabilities and global reach.

In terms of opportunities, Ayala Corp. is looking at structurally attractive industries in the Philippines and select market abroad where it feels it can achieve a position of leadership.

To execute its strategy properly, Ayala Corp. has formed a new company named AC Capital to take charge of all its domestic non-listed subsidiaries. These business will be managed by AC Capital as a separate portfolio.

AC Capital will be tasked with searching new and creative ways for Ayala Corp. to create more value from each of these businesses and will also be the vehicle while driving the conglomerate’s new business building efforts.