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Saturday, April 12, 2014

Ayala raises $300 million from equity-linked bond sale

MANILA – Ayala Corporation (AC) has raised $300 million from the issuance of bonds that can be exchanged for shares in the conglomerate's real estate arm.

In a disclosure to the Philippine Stock Exchange, the Philippines' oldest conglomerate said its wholly owned unit AYC Finance Limited issued the bonds, carrying an interest rate of 0.5 percent per year, exchangeable to common shares of Ayala Land Inc (ALI) at P36.48 per share, a premium of 20 percent over its closing price on Thursday.

The offering was 2.5 times oversubscribed, AC president Fernando Zobel de Ayala said during the conglomerate's stockholders' meeting.

ALI shares fell following the Ayala group’s disclosure but AC chief financial officer Delfin Gonzalez clarified the issuance will not result in a dilution of ownership in the property firm because the shares to be exchanged will come from the conglomerate's stake in the real estate firm.

AC’s holdings in the property company will fall to 46.5 percent from 49 percent if all bondholders will exchange their debt for shares in ALI.

In explaining why AC opted to link the offering to its real estate business, Gonzalez said: "We decided not to use Ayala Corp because the Ayala Corp share price has a conglomerate's discount to net asset value. We decided to use Ayala Land because Ayala Land comprises the largest proportion of the value of Ayala Corp."

The offering is the first equity-linked international issuance by a Philippine issuer in the past two years. It has also achieved the lowest cost of financing across Asia ex-Japan in 2014.

"This offering is important as it enables us to continue the pursuit of investment opportunities in new growth areas and the realignment of Ayala Corporation’s portfolio mix to further optimize shareholder returns. Ayala Land remains an important and integral part of Ayala Corporation. It is a significant growth driver of the Ayala group and we continue to share synergies as we work on targeted projects particularly in energy and transport infrastructure,” AC chairman Jaime Augusto Zobel de Ayala said in a statement.

The Ayala group intends to use proceeds from the issuance for general corporate purposes and investments, particularly those at the parent level.

The offering is expected to close on or about May 2. The bonds will be exchangeable starting June 11 until the tenth day prior to its May 2, 2019 maturity date.

Starting May 2, 2017, bondholders will have the right to require the company to buy back their debt for cash at a price equal to 100 percent of the principal amount of the bonds. On the same date, AC can call the bonds if the closing price of ALI shares for any 30 consecutive trading days is at least 130 percent of the exchange price.

Goldman Sachs International acted as the sole international bookrunner of the offering and BPI Capital acted as sole domestic lead manager.

Source: Interaksyon

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