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Stock Commentary

Vista Land’s P5B prefs sale approved by PSE

Merkado Barkada
Vista Land�s P5B prefs sale approved by PSE

The PSE approved the Vista Land [VLL 1.46 unch; 204% avgVol] preferred shares sale that could raise up to P5 billion for Manny Villar’s real estate development company [link]. VLL will use the proceeds to refinance P36.4 billion in outstanding debt. BDO [BDO 153.00, up 0.1%; 50% avgVol] is the largest counterparty to VLL’s debt, and its subsidiary, BDO Capital, is the first-listed issue manager for this follow-on offering. The offering is split between Series 2A and Series 2B, with 30 million shares between the two tranches as part of the firm offer and up to an additional 20 million between the two tranches as part of an over-allotment option. VLL will price the deal today. The offer period will run from September 16 through September 25, with a listing on October 4.


MB bottom-line:  In the context of a preferred shares sale, “pricing” refers to the dividend rate not the price of the shares. We already know the price of each share will be P100, but what we don’t know is the annual dividend yield that VLL will pay to attract attention from potential buyers. While the Pricing Date is technically today, it’s common for news of the price (or dividend rate) to take a little extra time to make it into public hands. It’s not a hard deadline, and I wouldn’t be surprised if we need to wait until tomorrow morning to hear what they’re going to pay on each tranche as a dividend. I feel like common sense says that they’ll probably need to pay a higher rate than Petron [PCOR 2.57, down 0.4%; 54% avgVol] did for its follow-on preferred shares (6.8364% and 7.1032%) just because of all the baggage that comes along with the Villar family name.       

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MANNY VILLAR

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