MANILA, Philippines — Puregold Price Club Inc. successfully returned to the local debt market and raised P12 billion to bankroll the company’s expansion plans.
In a disclosure to the stock exchange on Thursday, the listed grocery operator said investors swarmed its “landmark” issuance of 7- and 10-year papers that came 5 days after fund raising plans were first announced. Total orders were 1.3 times the original offer.
Puregold sold as planned.
Strong demand for the papers helped Puregold realize its goal of locking in affordable payment terms for its new debts. Broken down, 7-year securities fetched an average interest of 4%, while their 10-year counterparts were charged 4.51% annually— rates considered by Puregold “competitive.”
“This corporate notes transaction is the largest capital market fundraising of the Company in its 22-year history and demonstrates its confidence in the expected economic recovery of the Philippines and the opportunities that it will bring,” Puregold said.
“In line with this, the Company will use the proceeds from this notes fundraising to fuel growth initiatives and accelerate business expansion,” it added.
Puregold’s 444 stores nationwide highly benefited from a consumer scramble to fill up household stocks before strict lockdowns were enforced last March. With many still staying indoors even after restrictions eased June 1, the firm bucked a general bleak business sentiment to register earnings of P3.4 billion in the first half, up 20.1% year-on-year.
“Amidst the pandemic, Puregold... plans to leverage on this strength to build a stronger business across the country,” the company said.
Sought for comment, Cara Alviar, equity analyst at Philstocks Financial Inc., said investors felt secured with Puregold’s prospects amid the pandemic. “In terms of liquidity and stability, Puregold would have more capacity to pay these obligations,” she said in a text message.
Unlike other companies raising new debt just to settle old ones, Alviar said Puregold enticed investors because borrowed funds will be spent to expand business.
“If you are an investor, it’s no-brainer that you would want to invest in something that would pay you back ‘certainly’ or with less risk,” she explained.
That said, immediate investor reaction to the news was muted. Shares in Puregold were trading down 1.33% to P48.35 each as of 12:47 p.m.