Conglomerate San Miguel Corp. is allotting some P700 billion in capital expenditures (capex) over the next five years to fund the expansion of its core and new businesses.
In an interview on the sidelines of the investors’ briefing for the company’s P30-billion bond float, San Miguel Senior Vice President and Head of Treasury Sergio Edeza said the firm’s food group led by San Miguel Pure Foods Co. and infrastructure businesses, such as toll roads and airports, will get most of the funds.
Also getting substantial shares are its power business through SMC Global Power Holdings Corp. and San Miguel Brewery Inc., which is putting up breweries and bottling facilities in Southern Luzon and Mindanao with a capacity of 2 million hectoliters each.
The company’s CFO, Ferdinand Constantino, said the capex figure does not yet include the proposed international airport in Bulacan, the unsolicited bid that the company submitted to the government. This project may cost another P700 billion on its own.
“As usual, the capex will be funded by 70-percent debt and 30- percent equity,” Edeza said, adding that they will be tapping all available funding options, such as bank loans, preferred-share issuance and cash from operations.
San Miguel may also opt to offer more bonds, although Edeza noted that they will already have used up the P60 billion that was shelf registered with the Securities and Exchange Commission (SEC) once they conclude the ongoing bond sale. The bonds, already the third tranche of the company’s P60-billion bond shelf registration approved by the SEC, are comprised of five-year Series E Bonds due 2023, seven-year Series F Bonds due 2025 and 10-year Series G Bonds due 2028.
Based on an indicative guidance issued during an investors’ briefing, the five-year bonds will be priced to yield about 5.6 percent a year, the seven-year bonds about 6 percent and the 10-year bonds about 6.4 percent.
Proceeds from the bond offering will be used to refinance existing US dollar-denominated obligations and for investment in existing businesses, including SMC Global Power, San Miguel Holdings Corp. and San Miguel Properties Inc.
San Miguel has named BDO Capital and Investments Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investments Corp., ING Bank, SB Capital Investment Corp. and Standard Chartered Bank as the joint underwriters and book runners for the offering.