Thursday, 5 March 2009

San Miguel bonds swarmed

Bloomberg, Jenniffer B. Austria
The Manila Standard

San Miguel Brewery Inc., the beer unit of food and beverage giant San Miguel Corp., may cancel plans to sell bonds in dollars after demand for its local currency notes exceeded the amount offered.

Orders for peso bonds topped the brewer’s target of P38.8 billion, according to two people with knowledge of the deal, who asked not to be identified because the sale hasn’t been completed.

Should the sale be fully subscribed in pesos, the company won’t need to borrow in dollars, San Miguel Brewery president Ramon Ang said in a text message response to queries from Bloomberg News today, without being more specific.

Debt-free San Miguel Brewery last month said its board approved borrowing as much as P38.8 billion in local currency or dollars to help the company buy land and beer brands from parent San Miguel Corp., which has said it expects to complete the asset sales by April. The brewer, whose profit last year jumped 25 percent to P10 billion, will be buying brands that control 95 percent of the Philippines’ beer market.

The purchases may save the brewer about P1 billion yearly in royalty fees it pays to the parent, Deutsche Bank AG said in a report yesterday.

San Miguel Brewery hired Citigroup Inc., Credit Suisse Group AG, Deutsche Bank, Royal Bank of Scotland Group Plc and UBS AG to help it sell about $500 million in bonds, people familiar with the situation said last month.

San Miguel Brewery is gathering 11 financial institutions to handle its proposed P38.8-billion bond offering slated this month.

San Miguel Brewery said in a filing with the Securities and Exchange Commission that it had tapped Hong Kong and Shanghai Banking Corp., Development Bank of the Philippines, Land Bank of the Philippines, BDO Capital and Investment Corp., BPI Capital, China Banking Corp., Standard Chartered Bank, Rizal Commercial Banking Corp., Philippine Commercial Capital Inc., ING Bank and First Metro Investment Corp. as joint lead underwriters for the bond offering.

Sources said the bond offering was so huge that many financial institutions were needed to underwrite the offering.

San Miguel Brewery and the 11 financial institutions will shortly sign the underwriting agreement as soon as it obtained approval from the SEC. Final price for the bond offering will also determined once the company secures SEC approval.

San Miguel Brewery is also allotting another P500 million to cover oversubscription. The bonds will be paid in three tranches and payable in three, five and 10 years.

Philippine Ratings Services Corp. earlier assigned a rating of PRSAaa for San Miguel Brewery’s bond issuance, the highest rating it gave.

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