San Miguel May Raise $1 Billion Via Preferred Shares This Yearby and
Proceeds would be used to repay dollar debt, president says
Company seeking to cut U.S. currency exposure as peso weakens
San Miguel Corp., the Philippines’ largest company, is considering raising as much as $1 billion by selling local currency preferred shares and using the proceeds to repay dollar debt as it seeks to trim its foreign liabilities amid a weaker peso.
“We can still do a sale this year,” President Ramon Ang said in an interview late Monday. “A lot of investors are looking to buy more” San Miguel preferred shares, he said, declining to elaborate.
San Miguel, a century-old company that’s over the years transformed from a brewer to an investor in oil, power and infrastructure, raised 33.5 billion pesos ($729 million) selling preferred shares in September at 75 pesos apiece. That offering was five times oversubscribed and proceeds partly refinanced 54 billion pesos of similar securities due that month.
The Philippines’ peso is expected to weaken 3 percent to 47.20 a dollar by the end of the year from Monday’s close of 45.80, according to a median estimate in a Bloomberg survey. The currency has depreciated 2.7 percent since Dec. 31, making it more expensive for companies in the Southeast Asian nation to service their dollar-denominated debt.
That’s put pressure on San Miguel’s earnings, even amid gains from its oil refining and beer and liquor businesses. Profit in the first half fell 8 percent from a year earlier, the company said in August. Excluding the impact of foreign exchange movements, recurring profit rose 15 percent.
San Miguel has some $13 billion equivalent of bonds and loans outstanding, according to data compiled by Bloomberg. Of that, U.S. currency notes total $6.8 billion, with a weighted average fixed coupon of 5 percent.
The company is seeking to at least double its revenue over the next five years to between $40 billion and $50 billion, via both acquisitions and organic growth, Ang told reporters in Manila last month. Its stock has slumped 35.3 percent this year versus a 1.9 percent decrease in the country’s benchmark stock index.