ABS-CBN raises P6 billion in maiden bond issue

ABS-CBN News

Posted at Jan 28 2014 05:46 PM | Updated as of Jan 29 2014 01:46 AM

MANILA, Philippines - Media and entertainment giant ABS-CBN Corporation made a successful debut in the domestic retail bond market.

ABS-CBN raised P6 billion from the sale of fixed-rate bonds with a tenor of seven years at 5.335% per annum.

"The success of this bond issue is a major achievement for our company, and is a culmination of management's adoption and efficient execution of key business strategies over the last few years," Aldrin M. Cerrado, Chief Financial Officer of ABS-CBN, said in a statement.

The Securities and Exchange Commission (SEC) earlier authorized ABS-CBN to issue up to P10 billion fixed rate bonds in one or two tranches.

For the first tranche, ABS-CBN decided to issue P5 billion, with an overallotment option to provide some flexibility in the event of an oversubscribed issue. Due to strong demand from retail and institutional investors, the underwriters exercised an overallotment option of P1 billion. The company and the underwriters priced the issue at 110 basis points over the benchmark rate.

"I am particularly pleased that we were able to price the issue at the lowest end of the indicative pricing range, and achieve broad distribution to retail investors," Cerrado said.

BDO Capital and Investment Corp., BPI Capital Corp., and HSBC acted as joint lead managers for the transaction. The company had earlier been given the highest possible rating of PRS Aaa from Philippine Ratings Corporation (PhilRatings).

"I am happy to have started the year with a significant milestone for ABS-CBN, and I hope this bodes well for what we plan to accomplish in the coming years‚” Cerrado added.

For his part, Eduardo V. Francisco, President of BDO Capital, said: "We are are proud to have played a major role in successfully bringing to market ABS-CBN's first ever domestic retail bond issuance. The positive response we received from investors reinforces our view that ABS-CBN has earned a solid credit standing among the domestic investing community."

ABS-CBN said proceeds from the bonds will be used to finance its capital expenditure program over the next few years. The company earlier said it is allocating P10 billion in capital expenditures over five years starting 2014.

The company will invest P4 billion for production forward planning initiative, which includes the construction of sound stages.

ABS-CBN is also setting aside P2 billion for the expansion of its pay-TV business through Sky Cable, and P1 billion for digital terrestrial television (DTT), as the Philippines starts shifting to the Japanese digital TV standard from an analog system this year. Another P3 billion will be set aside for general capital expenditures through 2018.

ABS-CBN is on track for the Philippines’ switch to DTT, with test broadcasts are being conducted in different parts of the country.

ABS-CBN has also successfully expanded its business into print, licensing, music, TV shopping, telecommunications and theme parks.

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