San Miguel targets $815-M bonds in first quarter

Reuters

Posted at Feb 03 2009 11:51 AM | Updated as of Feb 03 2009 07:51 PM

San Miguel Brewery, the Philippine flagship of the San Miguel group, wants to raise as much as P38.8 billion ($815 million) via a bond offer in pesos or dollars, or both, before the end of March, its president said on Tuesday.

The brewery arm of Southeast Asia's biggest food and drinks group told the stock exchange on Monday its board of directors "approved the issuance of peso and/or dollar bonds of up to P38.8 billion" to fund its acquisition of domestic beer brands and real estate used by the brewery from its parent firm.

When asked to clarify the timing of the offer. San Miguel Brewery president Ramon Ang, also president of the parent firm San Miguel Corp said in a text message to Reuters: "Yes, first quarter."

He said the company has yet to finalize the size of the possible peso and dollar issues, with the brewer still in talks with banks on the terms of the offer.

San Miguel Brewery, the first brewery in Southeast Asia, has tapped HSBC and the state-run Development Bank of the Philippines as underwriters for the offer, banking sources said last week.

Shares of the brewery firm were unchanged at P10 in early trade on Tuesday as the main index edged up 0.35 percent.

Ang said last week the debt-free brewery firm was considering a tenor of 10 years or longer for the debt issue.

The brewery firm said on Thursday it needed to have full oversight over its brands to keep its margins under control as it stops royalty payments to its parent.

It expects to complete the purchase by April. It valued the brewery brands at P32 billion and the land on which its facilities stand at P6.8 billion.

The firm has tapped UBS as financial advisor in valuing the beer brands and related assets.

The brewer told the stock exchange on Monday it had used up all the P616 million proceeds from its initial public offer last year.

Parent firm San Miguel plans to use proceeds from the sale to pay down debt and fund acquisitions, such as its planned purchase of a majority stake in oil refiner Petron Corp worth about $675 million.

It acquired 27 percent in utility firm Manila Electric Co for $607 million in October as part of a long-standing plan to diversify into heavy industry to fuel future growth.