San Miguel Corp. said Tuesday the investors’ decision to hold on to SMC Global Power Holding Corp.’s securities reflects the company’s continued strong business fundamentals.
SMC said SMCGP’s buyback of about $400 million worth of its dollar-denominated debts was well received―but an overwhelming majority of investors chose to hold on to the securities.
A total of $123.934 million in securities was submitted for the tender offer at the deadline, well below the total $400-million offer limit set.
SMC president and chief operating officer Ramon Ang said this was a clear indication of strong confidence in the stability, strength and value of SMCGP, which hobbled under skyrocketing global fuel prices and an unfavorable decision by a government regulator on its petition for a temporary rate hike.
SMCGP undertook the tender offers as part of its proactive approach to managing its capital structure by using available liquidity sources to allow it to repurchase the perpetual securities, as the company believes that the current market prices did not reflect the appropriate standing of SMCGP.
The tender offers were also intended to provide liquidity to holders of the perpetual securities.
“We thank the investors who participated in the exercise as well as those who decided to stay and take the long-term approach. This development is a strong statement of support for our company and confidence in our ability to navigate existing challenges, honor our obligations and continue to grow the business moving forward,” Ang said.
The tender offer was a way for the company to allow investors to cash out of the bonds and allay concerns over its finances following the Energy Regulatory Commission’s denial of its petition to recover losses from its fixed-rate power supply agreements with Manila Electric Co.
SMCGP accepted all valid tenders with the final settlement date expected on or about Nov. 9.
Ang said that while the offer was well-received across both onshore and offshore markets―with the relevant securities’ prices trading up following the firm’s announcement on Oct. 26―the final results demonstrate strong investor appetite to maintain participation in the SMCGP credit.
“We are grateful for the confidence that investors continue to show. For us, this means our investors understand that current market prices do not reflect the true strength of SMCGP and the total San Miguel Group,” And said.
“SMC has never been more confident about the fundamental strength of our businesses, which are so much a part of the fabric of everyday Philippine life. We will prioritize actions to ensure our companies will continue to thrive,” he said.
The company said the final results of the tender offers demonstrated a strong investor appetite to maintain their participation in the SMCGP credit, with the majority of the investor base choosing to maintain their holdings in the current market rather than sell into the tender offers.
“Despite challenging market conditions with the U.S. Treasury Yields rising 15-25bps from the time of launch until the expiration of the tender offers, our SMCGP bonds have traded well and maintained at higher levels,” Ang said.
BofA Securities acted as the sole dealer manager for the tender offers.