Jollibee reevaluating preferred share offer, mulls other options

MANILA, Philippines —  Asian food conglomerate Jollibee Foods Corp. (JFC) is reevaluating its previously planned preferred shares offering this year, with the company also considering other fundraising options.

JFC was initially eyeing to raise as much as P8 billion through the issuance of five million preferred shares with an oversubscription option of up to three million preferred shares at P1,000 apiece.

“For the preferred shares really the idea there was for investments in the Philippines, for growth in the Philippines. Now, what we’ve seen recently, it’s a good surprise and is a good problem to have, but a growth in the Philippines is faster than our planned growth, which is to say it’s a cash business of course,” JFC chief financial and risk officer Richard Shin said in a media briefing.

“So that is to say we don’t know how much really we need in terms of preferred shares because our business is actually growing much faster,” he said.

Last April, Shin said the timing of the preferred shares issuance is this year, noting that P5 billion of the supposed proceeds will be used for expansion and growth projects, including growth in Philippines.

“So we’re going to reevaluate and we’re going to consider if we need to do the preferred shares – if we need to, if we do it, if we need the five million cap that’s been announced,” Shin said.

“We’re taking a look at this again, understanding that the rates haven’t come down yet. And that’s important because to lock into a fixed rate, whether it’s a coupon or whether it’s interest, at a time of a potential rate cut, that’s probably not the right way,” he said.

Shin said JFC is looking at other instruments as more variable-related to take advantage of the coming lower interest rates.

“We’re looking at this holistically. And the great thing is we have options. And we have partners who have been with us for decades. We have many banks and other institutions that are willing to finance us. So we’re looking at all the options at the moment,” he said.

For this year, JFC plans to open 700 to 750 owned and franchised stores for this year and expects capital expenditures to be in the range of P20 billion to P23 billion.

Of these new stores, 80 percent will be located abroad, while the other 20 percent will be in the Philippines.

Overall, the Jollibee Group is optimistic on seeing a growth trajectory in the next five years as it continues to penetrate big markets.

“We look at five years forward and we do see significant opportunities of course coupled with challenges, like inflation and interest rates. But if you take a step back and you look at this part of the world, we have some of the fastest growing economies on relative terms if you want to use gross domestic product as a measure,” Shin said in a recently held Indo-Pacific Business Forum in Manila.