Philippines: San Miguel Corp. will market a dollar-denominated debt and equity issue

San Miguel Corp., Southeast Asia's largest food and beverage firm, will market a dollar-denominated debt and equity issue, a company official said, confirming a rare foray into the capital markets.

San Miguel has tended to rely on bank loans for its funding needs but is turning to the market as it expands beyond its home base in the Philippines, Reuters posted on April 19.

A tour to market the hybrid perpetual issue would begin in Manila on Thursday before moving to Hong Kong and Singapore on Friday, Zurich on April 24 and London on April 25. The announcement was made by officials, who asked not to be named.

The issue, callable in five years and at the end of each quarter thereafter, is expected to be priced soon after the investor presentations are over. The final size would depend on market demand, the spokesperson said, adding that the last time San Miguel issued bonds was about 10 years ago.

Moody's Investors Service assigned a (P)Ba3 foreign currency rating to the proposed offer along with other ratings on the firm -- the first time it has assigned ratings to San Miguel.

The rating agency said the instrument was "part debt and part equity-like" and that provisionally, for the purpose of financial analysis, it was putting it in a category regarded as 50 percent debt, 50 percent equity.

Ferdinand Constantino, the company's chief finance officer, said in a statement to the stock exchange that San Miguel Capital Funding Ltd, a wholly owned offshore subsidiary of San Miguel Corp, would issue "a benchmark size offering of perpetual non-cumulative non-voting preferred shares". A benchmark deal is usually at least $300 million.

According to Constantino, Citigroup Global Markets Ltd, Credit Suisse Securities (Europe) Limited, Deutsche Bank AG in Singapore and HSBC are joint bookrunners and lead managers for the offering.

A company source revealed that San Miguel planned to raise about $500 million through an overseas bond to partly refinance a bridge loan facility the firm got last year to fund its acquisition of National Foods Ltd., Australia's largest producer of fresh dairy products, Reuters communicated in January.

San Miguel, owned 20 percent by Japan's Kirin Brewery Corp , has previously relied on loans from banks to fund its operations and investment.

It is expanding its presence in the Asia Pacific region after dominating its home market for beer, soft drinks, dairy, poultry and processed food.

The company expected its global operations to account for 40 percent of group revenue this year after it doubled to 35 percent last year, Ramon Ang, president of San Miguel, has recently commented.

San Miguel B shares open to all investors climbed 1.27 percent to 80 pesos on Wednesday and its A shares, exclusive to local investors, were unchanged at 80 pesos. The main stock index edged down 0.27 percent. ($=51.48 pesos)

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