SM Investments plans P10-billion bonds to fund expansion

MANILA, Philippines - SM Investments Corp. (SMIC), the listed investment holding firm of the family of retail tycoon Henry Sy, is planning to issue up to P10 billion worth of fixed-rate bonds to fund its expansion initiatives.

SMIC said the proposed bond issue was approved by its board of directors yesterday, with the pricing, terms and conditions and other features still to be determined by management.

BDO Capital & Investment Corp. has been tapped as lead underwriter and issue manager for the offering.

SMIC is engaged in four businesses through its subsidiaries — shopping mall development and management (SM Prime Holdings Inc.); retail merchandising (SM Department Stores); financial services (Banco de Oro Universal Bank and China Banking Corp.) and real estate development and tourism (SM Development Corp. and Highlands Prime Inc.).

SM Prime has successfully raised P5 billion from the issuance of floating and fixed rate notes. Proceeds from the issue will be used to fund ongoing capital expenditures and for general corporate requirements.

The facility was oversubscribed, with 11 primary institutional lenders subscribing to the issue.

For this year, SM Prime plans to open SM City Naga in Camarines Sur, SM City Rosario in Cavite, SM City Pamplona in Las Piñas, and the SkyGarden at SM City North Edsa. The company is also set to expand SM City Rosales in Pangasinan.

By the end of 2009, SM Prime will have 36 malls nationwide with an estimated gross floor area of 4.5 million square meters. Including the SM China malls, the company’s estimated GFA will reach 4.9 million sqm.

To further boost its retail network, the SM Group will build 16 new supermarkets, five hypermarkets and two department stores. To date, the group has 37 supermarkets and 13 hypermarkets.

It opened supermarkets in EDSA Pasay, Parkmall Cebu, Nagtahan, Marikina, Tanay, North Edsa 2 and Cubao last year, compared with only two openings in 2007.

Makro, an unlisted company engaged in buying and selling of food and non-food items under the warehouse club format, has 14 stores with total leasable space of 107,555 square meters. It was acquired by SMIC in 2007 through its parent holding company, Rappel Holdings Inc.

Last year, SMIC reported a 15.6-percent growth in net earnings to P14 billion as revenues expanded 19 percent.