Ayala group seeks $150-M club loan

The Ayala Group has reached an agreement with Standard Chartered Bank for a $150-million syndicated loan to pay its maturing obligations next year.

In a letter to the Philippine Stock Exchange (PSE), publicly-listed Ayala Corp. confirmed earlier reports that the company’s offshore arm, AC International Finance Ltd., has mandated the UK-based SCB to arrange the syndicated loan.

Ayala Corp. would guarantee the loan for AC International and the proceeds would be used to pre-fund next year’s maturing obligation.

Tagged as one of the few local companies still able to keep one step ahead of its obligations, Ayala Corp. said the borrowing would have a five-year maturity, structured as an amortizing loan where principal payments would be made before maturity.

Earlier, it was reported that Ayala Corp. was targeting a spread of 285 basis points over the London Inter-Bank Offer Rate (Libor).

Last year, Ayala Corp. was able to retire roughly $170-million worth of debts, funded partly by its P27-billion cash reserves from its retained earnings and the proceeds from the sale of its subsidiary, Pure Foods Corp.

After the retirement of these loans, Ayala’s total indebtedness stood at $762 million, consisting of a combination of fixed and floating-rate loans accumulated by the group in 1996.

Although Ayala Corp. expects about $212 million of its obligations to fall due this year, the company expressed confidence that it could easily dip into its cash reserves and pay off the amount.

The company’s property arm, Ayala Land Inc., is also raising P750 million through the issuance of fixed and floating rate notes.

Ayala Corp. has three core businesses – banking, telecommunications and property development – that have managed to provide a steady revenue stream despite the economic slump. – Des Ferriols