San Miguel Brewery eyeing $300-M backstop debt

Reuters

Posted at Feb 16 2009 03:54 PM | Updated as of Feb 16 2009 11:56 PM

San Miguel Brewery is considering $300 million in backstop debt funding to help buy the domestic beer brands and real estate assets from its parent firm, a group executive said on Monday.

The debt would be a backup plan in case the beer-making arm of Southeast Asia's biggest food and drinks company, San Miguel Corp., is unable to raise enough funds from a planned issue of up to P38.8 billion ($820 million) in peso and/or dollar bonds, Ramon Ang, president of San Miguel group, told Reuters in a text message.

San Miguel Brewery has tapped HSBC and the state-run Development Bank of the Philippines as underwriters for the potential peso portion of the offer, according to banking sources last month.

Citigroup, Credit Suisse, Deutsche Bank, Royal Bank of Scotland, and UBS were mandated for the potential dollar bond issue, two sources familiar with the matter had said earlier.

San Miguel Brewery has valued the brewery brands at P32 billion and the land on which its facilities stand at P6.8 billion.

The company has said it was acquiring the assets from its parent because it needed to have full oversight over its brands to rein in margins as it stops royalty payments to its parent.

Parent firm San Miguel Corp is planning to use the proceeds from the sale to finance its own acquisitions, including 27 percent of utility Manila Electric Co. worth around $607 million and a majority stake in oil refiner Petron Corp valued at about $675 million.