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SMC completes $1-B offer
SUNDAY, 01 MAY 2011 17:35    MIGUEL R. CAMUS   
CONGLOMERATE San Miguel Corp. (SMC) and its controlling shareholder have completed a common share and exchangeable bond sale that raised close to $1 billion, deal arrangers said as the offer period officially ended on Friday.
Excess demand from the equity component has given rise to potential shares changing hands ahead of the lifting of SMC’s trading suspension on May 5, based on interviews with investors and traders.

SMC concluded last week the equity portion of the fundraising measure.

The domestic share sale, including overallotments, raised about $150 million, said Eduardo Francisco, president of BDO Capital and Investment Corp., one of bookrunners, in a phone interview.

The domestic offering was composed of 31.52 million common shares with an option to sell another 27.58 million shares at the offer price of P110 each to cover excess demand.

An international bookrunner on Friday likewise confirmed that a 10-percent overallotment option was exercised during the overseas share offer allowing them to raise over $270 million from selling 86.68 million common shares.

This comes on top of $600 million worth of bonds convertible into SMC treasury shares sold to international investors before the Easter holidays.   

Francisco reiterated that the domestic oversubscription of at least two times was due to the “attractive” pricing of the shares at P110 each, or a 28-percent discount to SMC’s last traded price of P153 per share.

Reports of oversubscription among individual domestic stock brokerage firms were disproportionately larger, with some claiming that demand exceeded seven times their allotment.

About 134 active trading participants of the Philippine Stock Exchange were entitled to 55,000 shares each or a combined 7.37 million shares representing 23 percent of the base domestic offering.

Market watchers have likewise noted that higher-than-anticipated demand may prompt some investors who availed of the offering to part with their shares and lock in profits ahead of the lifting of SMC’s trading suspension.

At least two traders have said the current prevailing over-the-counter (OTC) price of SMC shares range from  P118 to P120, implying a 7-percent premium to the offer price at the lower end.  

“I don’t think the market right now is expecting San Miguel to open at [P153], but we think it will open over P120,” a trader said, when asked to explain the OTC price. One investor, who also declined to be named, likewise confirmed the aforementioned range.  

SMC said in its prospectus that it will use P22 billion from the proceeds to fund investments in infrastructure, such as power, railways, telecommunications and mining while controlling stockholder Top Frontier Investment Holdings Inc. will use net proceeds from the sale to repay shareholder advances.

Credit Suisse Group AG and Standard Chartered Plc. were hired as global coordinators for the bond and share sales, the statement said. Goldman Sachs Group Inc., UBS AG, Daiwa Capital Markets, ATR Kim Eng Financial Corp., BDO Capital and SB Capital Investment Corp. were hired to help manage the offer.

SMC shares have been placed under a trading suspension since April 13—a week ahead of schedule—to deter speculative price movements.

(Miguel R. Camus)

 

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