Ayala Corp. on Tuesday said it received strong investor demand for its P15-billion preferred shares, which the company will start selling this week.
The company said in its disclosure to the Philippine Stock Exchange (PSE) that the Class “B” Series 2 preferred shares will have a dividend rate of 5.575 percent per year.
“The dividend rate was set at the end of trading hours on October 20, 2014, following the customary book-building process and reflecting strong investor demand,” the company said.
The said shares will be issued on November 5, the same time it will become available for trading at the PSE.
The company is offering up to 30 million in preferred shares at P500 apiece with a total value of P15 billion. The said offering involves 20 million in primary offer and 10 million in oversubscription option. Class B shares are available both for purchase of both local and international investors. The company, however, will only sell the said securities locally.
The said shares are perpetual equity securities that have preference in the payment of dividends. If the shares are not redeemed at the end of the fifth year from the date of issue, the dividend yield shall be reset to either the original dividend rate or the sum of the closing of the five-year secondary market rate for bonds, plus a spread of 175 basis points.
In the 10th year, the dividend rate shall be reset to either the adjusted dividend rate or the sum of the closing of 10-year secondary market rate, and a spread of 300 basis points.
Proceeds of the offer will be used by the company to pay off its maturing domestic loans.
The company said it has a P1.46-billion loan from Metropolitan Bank and Trust Co. and P5 billion from Banco de Oro. Both loans were due in October.
Ayala also has a P1.49-billion loan in the form of corporate notes from various lenders, including the Government Service Insurance System and Philippine American Life and General Insurance Co., falling due in February 2018, and another P5-billion loan from BDO that will mature in November 2019.
Previously, the company earmarked the said proceeds for capital spending, mostly for its infrastructure projects.
“The change in plan is to provide investors more certainty in the use of proceeds. The additional debt that will be refinanced by the preferred shares will help us manage our maturity profile and allow us to fix some of our floating obligations,” the company said in its recent disclosure.