Ayala hikes ‘A’ share offering to P2-B

Ayala Corp., one of the country’s oldest conglomerates, has increased the size of its preferred A share offering to P2 billion to raise funds for its working capital and to refinance debts.

Based on the amended registration statement filed with the Securities and Exchange Commission, Ayala will sell as much as 400 million redeemable preferred A shares or double the 200 million shares originally planned by the company. The shares will be issued at P5 per share and be redeemable on the third year from issue date at 100 percent of the offer price.

The preferred shares have preference over the company’s common shares in the payment of dividends and in the distribution of assets in case of dissolution and liquidation. They are cumulative, non-convertible, non-voting and non-participating but do not have any pre-emptive rights to any issue of common or preferred shares in the company.

Citicorp Capital Philippines Inc. was tapped as issue manager while BDO Capital & Investment Corp. and PCI Capital Corp. were appointed as joint lead underwriters.

Ayala is targetting to launch the proposed issue on Friday or at any later date that the company and the issue manager may agree on.

Apart from settling debt, the proceeds from the issue will also be used to fund capital expenditures.

As of end-September this year, Ayala Corp. had long-term debt of P42.08 billion or $803 million. Of the total, P31.905 billion is owed to banks and other financial institutions and the remaining P1 billion forms part of a syndicated term loan due 2005.

The company’s short-term debt, on the other hand, amounted to P4.64 billion or $89 million. Of this amount, P2.15 billion belonged to banks.

Ayala Corp. is the holding company of the Ayala Group of Companies, the largest conglomerate in the Philippines. Its business activities are divided into four sectors, namely real estate and hotels; financial services; telecommunications; and international operations and others.

The group’s strategy is to maintain its commitment to its business activities in the Philippines and to explore possible regional initiatives on a selective basis to enhance financial and operational capabilities and global reach.

The company expects its real estate and financial services businesses to remain its principal sources of dividend income.

In terms of opportunities, Ayala is looking at structurally attractive industries in the Philippines and select markets abroad where it feels it can achieve a position of leadership.

To execute its strategy properly, Ayala has formed a new company named AC Capital to take charge of all its domestic non-listed subsidiaries. These businesses will be managed by AC Capital as a separate portfolio.

AC Capital will be tasked with searching for new and creative ways for Ayala Corp. to create more value from each of these businesses and will also be the vehicle which will drive the conglomerate’s new business building efforts.

Members of the Zobel de Ayala family, individually and through their control of Mermac Inc., a private holding company incorporated in the Philippines, hold 58.2 percent of Ayala as of Sept. 30, 2002.

Other major shareholders of Ayala are the Mitsubishi Group, which holds a 15.1 percent stake and Shoemarket Inc. (4.3 percent), having first acquired interests in Ayala Corp. in 1974 and 1980, respectively.