Conglomerate Ayala Corp. has secured the green light from the Securities and Exchange Commission for its plan to offer Class “B” Series 2 preferred shares.
The company is offering up to 30 million in preferred shares worth P500 apiece for a total value of P15 billion. The offering involves 20 million in primary offer and 10 million in oversubscription option.
Ayala said it will use the proceeds solely to pay off its debts amounting to P15.77 billion. The company added it has a P1.46-billion loan from Metropolitan Bank and Trust Co. and P5 billion from Banco de Oro Unibank Inc. (BDO). Both loans are due this month.
On the other hand, Ayala has a P1.49-billion loan in corporate note from various lenders, which include the Government Service Insurance System and Philippine American Life and General Insurance Co., falling due in February 2018; and another P5-billion loan from BDO that will mature in November 2019.
Previously, the company earmarked the said proceeds for capital spending, mostly for its infrastructure projects.
“The change in plan is to provide investors more certainty in the use of proceeds. The additional debt that will be refinanced by the preferred shares will help us manage our maturity profile, and allow us to fix some of our floating obligations,” the company said in its recent disclosure.
Class B shares are available both for purchase of both local and international investors, but the company will only sell the said securities locally. The said preferred shares do not have any dilutive effect on the earnings per common share of the company, since it is not convertible to common shares, Ayala said.
The said shares will pay a dividend rate based on five-year and seven-year secondary market rate of bond papers plus a spread. The indicative dividend rate for the five-year term is placed at 4.85 percent and 5.35 percent per year, plus a spread of between 1.25 percent and 1.75 percent. On the other hand, the indicative rate of the seven-year term is at 5.0506 percent and 5.5506 percent, with a spread of between 1.35 percent and 1.85 percent.
The company has the option to redeem in whole, but not in part, the Class B series 2 share. BPI Capital Corp., BDO Capital
Corp. and First Metro Investment Corp. were picked as the deal’s underwriters.