THE Securities and Exchange Commission (SEC) on Friday approved the application of Cityland Inc. to sell some P1.8 billion worth of short-term commercial papers, proceeds of which will be used mainly to pay-off the company’s debt.
Cityland said in its application with the regulator that some P1.31 billion of the proceeds will be used to pay its outstanding short-term commercial papers as of June this year. The said debt of P1.31 billion has an average interest rate of 0.9987 percent and a maturity date of between 31 and 364 days.
About P460 million will be used for project-related costs and P18 million for its interest expense for its debt.
The company said it will mainly use the project-related cost to finance the construction of The Manila Residences II, a 39-story office, commercial and residential building in Taft Avenue.
As of June, the said building, which started construction in 2010, is about 68.5-percent complete.
The company sold more than half of the building’s units as of June, it said.
Cityland’s short-term paper will have a maturity not exceeding 365 days from the issue date and will carry a fixed interest rate of about 0.9987 percent.
The minimum purchase amount is P300,000, the company said.
Some 30 percent of the debt exercise will be allocated for institutional buyers and the rest to the public.
According to the company’s schedule of offering, it will sell the debt of P450 million each to be done in several tranches starting November this year through October 2015.
Cityland requested to be exempted to submit a credit rating since the P1.8 billionissuance does not exceed 25 percent of the company’s net worth based on its 2013 balance sheet. It also said that it will not hire an underwriter as it can sell the papers on its own.
The SEC exempted Cityland to hire an underwriter during the same debt exercise in 2008 through 2013.
The company reported a lower income for the first half of the year to P190.08 million, from last year’s P208.39 million. Revenues, meanwhile, also dropped to P305.54 million, from last year’s P472.38 million.
VG Cabuag