San Miguel may raise US$1b via preferred shares this year

[MANILA] San Miguel Corp, the Philippines' largest company, is considering raising as much as US$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 (US$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 per cent 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 per cent 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 per cent from a year earlier, the company said in August. Excluding the impact of foreign exchange movements, recurring profit rose 15 per cent.

San Miguel has some US$13 billion equivalent of bonds and loans outstanding, according to data compiled by Bloomberg. Of that, US currency notes total US$6.8 billion, with a weighted average fixed coupon of 5 per cent.

The company is seeking to at least double its revenue over the next five years to between US$40 billion and US$50 billion, via both acquisitions and organic growth, Mr Ang told reporters in Manila last month. Its stock has slumped 35.3 per cent this year versus a 1.9 per cent decrease in the country's benchmark stock index.

BLOOMBERG