Converge uses up P10 billion bond proceeds

MANILA, Philippines — Broadband provider Converge ICT Solutions Inc. has used up all of the P10 billion it raised from its latest bond issuance, spending the bulk of the amount for capital expenditures.

In a report, Converge disclosed that it spent the remaining P608.43 million in bond proceeds in the second quarter, marking the full disbursement of cash obtained from its fundraising last year.

In total, Converge spent P7.88 billion for capex and P1.97 billion for general corporate purposes aligned with the spending plan it made for the net proceeds.

In 2022, Converge entered the debt market with its maiden issuance of fixed-rate bonds. The firm owned by billionaire Dennis Anthony Uy raised P10 billion from the offer, with demand coming in from banks, insurers, pension funds, retail investors and retirement funds.

The bonds fetched an interest rate of 5.594 percent per annum and will be paid in five years until they mature in 2027. The issuance marked the first tranche of Converge’s plan of generating P20 billion through the sale of fixed-rate bonds.

Expectedly, Converge invested the bulk of the proceeds for infrastructure upgrades, especially as the firm widens its network presence nationwide.

Last year, Converge spent around P22 billion for its capex, directing 61 percent of the amount for asset deployment, 30 percent for backbone expansion and nine percent for other expenses.

For 2023, it decreased its capex guidance by almost half to P12 billion to keep its finances in the pink of health given that lending costs are rising worldwide.

In another development, Converge signed a partnership with Golden Arches Development Corp. (GADC), the local franchise holder of McDonald’s. Under the tie-up, Converge will extend fiber connectivity to additional branches of McDonald’s in the Philippines.

At present, Converge serves as the internet provider for roughly 40 percent of the more than 700 McDonald’s outlets in the country. Further, the firm contributed in developing some of GADC’s digital initiatives like the NXTGEN.

NXTGEN refers to McDonald’s branches that feature a multitude of innovative services, ranging from digital menus to self-order kiosks, geared toward improving customer experience.