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Stock Commentary

Jollibee gets SEC nod for preferred shares sale

Merkado Barkada
Jollibee gets SEC nod for preferred shares sale
The term “shelf-registration” just means that JFC has the ability to sell the 20 million preferred shares in tranches (the financial term for “batches”).
Merkado Barkada

The quick-service restaurant behemoth said that it had received a “pre-effective letter” from the SEC approving the shelf-registration of its proposed preferred shares sale, where Jollibee [JFC 192.10 0.98%] hopes to sell up to 20 million preferred shares at P1,000/share. The sale would raise up to P20 billion for JFC, and help to retire a large chunk of the US $600 million in perpetual securities it issued about a year and a half ago.

The term “shelf-registration” just means that JFC has the ability to sell the 20 million preferred shares in tranches (the financial term for “batches”), over the course of three years, to better align or time the tranche sales with JFC’s needs.

A “pre-effective letter” is the SEC’s way of providing early approval; the final, full approval of the offering is contingent upon JFC’s satisfaction of the various conditions in the letter, but these conditions are usually not exceptional or outside of the regular course of business in conducting a transaction like this. The preferred shares are cumulative, non-voting, non-participating, non-convertible, redeemable, and perpetual. For a refresher on these terms, please consider reading this MB post: Preferred Shares 101.


MB BOTTOM-LINE

I’m happy for the official disclosure from JFC because it was starting to get odd how little the company was talking about this issuance as we blew through the tentative dates that JFC’s prospectus had established. We still don’t have any updated hard info on the size of this first tranche that JFC will sell, or the dates for the offer period and listing, but we can bet that the size of the tranche is probably not going to be too different from the P12 billion offering that JFC was talking about in June (MB article here).

Assuming a successful sale where all the tranche shares are sold, that would consume 60% of the shelf registration in the first shot, leaving only about P8 billion in untapped, potential equity that JFC could raise through the future sale of preferred shares under this registration. 

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JOLLIBEE FOODS CORP PHILIPPINE STOCK EXCHANGE
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