Globe board approves P32-B stock rights offering

The Globe Telecom [GLO 2092.00 5.77%] [link] board approved a plan to conduct a stock rights offering (SRO) to raise P32 billion from existing shareholders.

The shares will come from the increase in GLO’s authorized capital stock that was already approved by the board and shareholders back in April.

GLO will use the money from the SRO to “accelerate growth” and support “strategic initiatives”, including capex “related to mobile and broadband”, and debt repayment for “loans used to fund capital expenditures”.

GLO selected BPI Capital,  the investment banking subsidiary of its sister company, BPI [BPI 93.50 1.37%], to be the SRO’s “Sole Global Coordinator”.

BPI Capital and PNB Capital will be co-lead underwriters for the portion of the SRO that will be sold in the Philippines. No word yet on any of the really important details, like dates, price, or the entitlement ratio.
 

MB BOTTOM-LINE

It’s refreshing to see a large company like GLO going to the market to cash-up for something growth-related, like capex, and not something survival-related, like working capital.

I’m going to reserve my opinion on the SRO itself until I get a chance to see more detail on what GLO will use the money for, specifically, and what kind of discount and entitlement ratio we’ll get for the actual SRO shares.

At current prices, GLO would need to sell approximately 15.3 million common shares to raise P32 billion, which should work out (very roughly) to about 1 SRO share for every 10 GLO shares. Of course, the actual price of the SRO shares could be quite different from my estimate.

It’s up to the GLO board to decide what kind of discount existing shareholders should get for having to respond to this call for capital.

The larger the discount, the higher the entitlement ratio. It’s interesting to see GLO and the Ayala Group push ahead with an SRO for GLO after canceling the share-swap and follow-on offering with ACE Enexor [ACEX 8.00] and AC Energy [ACEN 7.34 0.55%] just a couple of weeks ago due to “market conditions”.

Not trying to infer anything here! I just felt the cancellation of that whole transaction was out of character for the group. I’ll update here as GLO makes new details available to the public.