050107: GMA Network readies P7.8-B initial public offer

By Zinnia B. Dela Peña
The Philippine Star 05/01/2007

Broadcast firm GMA Network Inc. expects to raise as much as P7.78 billion from an initial public offering (IPO) of its shares and the issuance of Philippine deposit receipts (PDRs) this year, the company said in its registration papers filed with the Securities and Exchange Commission.

The company will be the second media network to list on the Philippine Stock Exchange next to rival ABS-CBN Broadcasting Corp.

In its filing, GMA said it plans to sell 91.346 million shares through a maiden offering to the public and about 822.115 million PDRs in the international markets at a price range of between P7 to P8.50 each share.

Of the total PDRs being offered, the bulk of 730.769 million are being offered by existing shareholders, namely FLG Management & Development Corp., M.A. Jimenez Enterprises and Television International Corp., the corporate vehicles of the Gozon, Jimenez and

Duavit families, respectively. The remaining 91.346 million PDRs will be sold by the company itself.

GMA said up to P1.55 billion can be generated from the domestic offering and primary PDR offer.

Each PDR grants the right to the delivery or sale of one common share. Although holders of PDRs will enjoy economic rights, they will not have any voting rights in respect of the underlying shares. Such voting rights will, until exercise of the PDR, be retained and exercised by GMA Holdings Inc.

A total of 182.692 million PDRs will be sold in the Philippines while 639.42 million will be sold overseas by Deutsche Bank, the appointed sole global coordinator and bookrunner and lead manager for the international offering.

ATR Kim Eng Capital Partners Inc., on the other hand, will serve as the lead underwriter for the local offering.

GMA has set aside 137.019 million PDRs to cover over-allotments, if necessary.

GMA said bulk of the proceeds from the offering will be used to fund its planned capital expenditures for this year and next year, amounting to P1.888 billion. These include the completion of two new state-of-the-art studios, the comprehensive roll-out of the regional signal strengthening and upgrade project, the implementation of a media asset management system, maintenance expenditures and the build up of the company’s regional infrastructure, production and studio facilities.

The network also plans to use a portion of the net proceeds for general corporate purposes.

As a result of an increase in advertising spending, GMA’s financial performance improved in the last three years from a net profit of P1.5 billion in 2004 to P1.96 billion last year. Net revenues likewise went up to P9.19 billion from only P6.49 billion in 2004.

To broaden its revenue base, the company since 2005 has identified additional revenue streams by broadcasting programming on an additional channel, Quality TV (QTV) and through the company’s subscription-based international channel, GMA Pinoy TV. It plans to launch a second international channel this year.

QTV was developed in partnership with Zoe Broadcasting Network Inc. and is the first TV station in the country specifically tailored primarily to middle-to-upper class female viewers.

GMA Pinoy TV was first aired in April 2005 and is currently shown in the United States, Japan, Guam, Saipan and Papua New Guinea, the Middle East and North Africa.

As of end-2006, GMA Pinoy TV had approximately 126,054 subscribers.

GMA also produces movies through GMA Films. Aside from this, it produces and broadcasts radio programs in 16 cities and one municipality across the Philippines on its wholly-owned operating network of 25 radio stations.

GMA intends to maintain its lead in total day TV ratings in mega-Manila through the launch of credible news, public affairs and quality entertainment programs and the refinement of its programming to attract and retain the audiences desired by advertisers and to boost profitability.

 

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