JG Summit eyes prepayment of $600-million debts

MANILA, Philippines - JG Summit Holdings Inc., the holding company for the business interests of the Gokongwei family, is eyeing the prepayment of a portion of the $600 million worth of debts due in 2012 and 2013.

JG Summit senior vice-president BJ Sebastian said the company intends to reduce its short-term debt but could not say how much it would prepay. “There is the option of prepaying some debt or terming out maturities,” he said.

Sebastian said JG Summit has a $300-million syndicated loan which matures in 2012 and another loan about the same size due in 2013.

As of end-June this year, JG Summit’s short-term debt amounted to P22.5 billion.

The Gokongwei investment holding firm is tapping the debt market with the planned issuance of P5 billion worth of five year bonds with an option to sell another P5 billion.

The bond issue was assigned a PRS Aaa rating by PhilRatings, which means the obligations “are of the highest quality with minimal credit risk and that the borrower’s capacity to meet its financial commitment on the obligation is “extremely strong.”

ING Bank N.V. Manila Branch and SB Capital Investment Corp. are the joint managers and lead underwriters for the issue which is tentatively scheduled to start on or before Nov. 12.

BDO Capital & Investment Corp., BPI Capital Corp., China Banking Corp., First Metro Investment Corp., Hongkong & Shanghai Banking Corp., Rizal Commercial Banking Corp. will serve as joint underwriters for the offering.

Based on the registration statement filed with securities regulators, JG Summit said it intends to use proceeds from the offering to support the capital expenditure requirements of its subsidiaries, particularly Digital Telecommunications Phils. Inc. and Cebu Air.

Digitel, which provides voice and data services through wireless and wireline technology, needs P6 billion to P8 billion from 2009 to 2011. It is the country’s third largest provider of wireless public and private telecommunications services through Digitel Mobile Phils. Inc. (DMPI), bannered by the Sun Cellular brand.

DMPI is currently at phase 8 of its network expansion, which includes phase 2 of 3G cell site rollouts in Metro Manila, North Luzon and Visayas and Mindanao. It has projected total capital expenditure of $280 million by the endof the year, $222 million in 2010 and $184 million in 2011.

Cebu Air, on the other hand, has budgeted around P4 billion this year and P4.9 billion in 2010 to support its fleet expansion program. It has signed a purchase agreement for up to 20 additional new Airbus A320-200 aircraft comprising of 15 firm orders and five purchase options.