Arthaland gets PSE approval for P3B prefs sale

Arthaland [ALCO 0.41, down 1.2%; 17% avgVol] [link] disclosed that it received PSE approval for the sale of up to 6 million Series F Preferred shares (ALCPF) at P500/share, in a follow-on offering (FOO) that will raise up to P3 billion for the Po Family’s real estate development company. ALCO will set the dividend rate for the ALCPF shares on October 22 (today), and will offer the shares for sale between October 28 and November 4, with a tentative listing date of November 14. Assuming full sale of the firm offer (P2.0 billion) and the oversubscription option (P1.0 billion), ALCO plans to use approximately 46% of the proceeds to pay down various forms of debt, 45% of the proceeds on land acquisitions for upcoming projects, and the remainder for working capital and general corporate purposes. 

MB bottom-line: I didn’t think we’d have to wait this long to see a company test the market’s thirst again for locking in high-yield investments like preferred shares. Sure, the Villar Family’s attempt to cash in on the “hot prefs market”  trend established by Petron [PCOR 2.67, down 1.1%; 53% avgVol] largely failed, but the prefs sold by Ayala Corp [AC 714.00, down 0.7%; 61% avgVol] verified the trend and cast the Vista Land [VLL 1.75, up 2.3%; 0% avgVol] prefs as non-conforming. But as I mentioned in the writeup for VLL’s prefs (MB link), failure is mostly a function of pricing, and for prefs, the dividend rate is the “price” that matters. The share price is basically irrelevant. I suspect this batch will sell if ALCO is even moderately aggressive with its pricing.