Ayala raising P10 B from preferred shares

MANILA, Philippines - Conglomerate Ayala Corp. (AC) will raise P10 billion in fresh funds next month through the sale of preferred shares.

The Securities and Exchange Commission said it has approved AC’s re- issuance of Preferred Class B shares.

“The offer period shall commence on Nov. 4 and end on Nov. 8,” AC said.

“The [preferred shares] are being offered at a maximum issue price of up to P500 per share. The total amount intended to be raised is P10 billion,” AC added.

In September, AC’s board of directors approved the re-issuance and offering of up to 20 million Preferred Class B shares, whose fixed quarterly dividend rate will be based on a 10-year benchmark plus spread.

“The proceeds shall be used to partially refinance certain denominated debt obligations due in the last quarter of 2013 totaling P10.25 billion,” AC said, adding that the balance will be funded by other credit facilities.

Net proceeds from the offering is P9.92 billion. AC will spend P6 billion to buy back Preferred Class A shares and another P4.25 billion to pay a bank loan from unit Bank of the Philippine Islands.

In June, the country’s oldest conglomerate opted to buy back P6 billion worth of Preferred Class A shares well ahead of maturity. The redemption will be effective on Nov. 25, 2013.

The Preferred Class B shares were first issued by AC in July 2006. Five years later, the company redeemed the shares, which then were worth P5.8 billion and carried an interest rate of 9.46 percent.

In the first half this year, AC’s net income hit P7.3 billion, up 20 percent from the same period last year as consolidated revenues expanded 21 percent to P74.6 billion.

The conglomerate is into real estate (Ayala Land Inc.), banking (Bank of the Philippine Islands), telecommunications (Globe Telecom), utilities (Manila Water Co. Inc.) and electronics (Integrated Microelectronics Inc.).

For this year, AC allotted P135 billion in capital expenditures to bankroll investment programs in its property, telecommunications and water businesses. It will also support investments in the power and transport infrastructure sectors.

The conglomerate committed to invest up to $1 billion over the next five years for the capital intensive but high-yielding power and infrastructure sectors.