Smart issues P5.5-B notes to refinance debts

MANILA, Philippines - Smart Communications has issued P5.5 billion worth of fixed-rate notes, proceeds of which will be used to refinance existing debts.

The 5- and 10-year notes were issued to 18 primary institutional lenders last March 14. The lenders were a mix of commercial and savings banks, trust banking groups, insurance companies and investment funds.

Smart officials said the proceeds will be used primarily to refinance existing debt obligations and, with the current low interest rates, the transaction is expected to result in substantial savings for the company.

First Metro Investment Corp. (FMIC) acted as the lead arranger and sole bookrunner for the transaction.

The notes issue was 1.3 times oversubscribed, with orders reaching P7.4 billion, which officials said demonstrates investor confidence in Smart’s financial strength and market leadership.

FMIC president Roberto Juanchito Dispo said the fixed-rate notes oversubscription is a testament to the strength of the Smart name.

“The notes were well received by the market with an oversubscription on its planned issue size. This is yet another significant milestone for the company. Despite these difficult times and with quality remaining to be an investor’s primary concern, this deal can be deemed a success by any measure. The balanced mix of participating lenders confirms high investor confidence in Smart’s future prospects,” he said.

Smart chief financial officer Anabelle Chua noted that the steadfast support given to them by investors reaffirms the investor community’s faith in Smart’s vision and strategic direction.

Smart had 27.1 million subscribers under its mainstream Smart brands reflecting net additions of 1.4 million for 2011, while value brand Talk ‘N Text ended with 20.5 million subscribers as a result of 1.5 million net additions for the year. Smart subsidiary CURE’s Red Mobile brand had 1.4 million subscribers, while newly acquired Digitel had 14.7 million Sun Cellular subscribers.

The group’s combined postpaid cellular subscriber base now leads the market with 1.9 million at the end of 2011, 1.4 million of whom were with Sun Cellular. As of the end of February, cellular subscriber base exceeded 65 million.

Wireless service revenues decreased two percent to P102.1 billion for 2011, compared with the P104 billion recognized last year. Without Digitel’s revenue contribution of P3.1 billion, wireless revenues would have fallen five percent to P99 billion as cellular voice revenues dropped seven percent while cellular data/text revenues likewise fell four percent to P44.4 billion. Smart continues to lead the industry in terms of both revenues and subscribers.

“The acquisition of Digitel has allowed us to expand and enhance our product offerings and thereby fortify the platform that should allow our revenues to grow.