SMIC to convert 10M unissued stocks into preferred shares

By Honey Madrilejos-Reyes
Reporter

SM Investments Corp. (SMIC), the listed holding firm of mall magnate Henry Sy, can now reclassify 10 million of its unissued stocks into preferred shares.               

This was made possible after majority SMIC stockholders approved the reclassification on January 16.     

In a disclosure to the stock exchange Monday, SMIC executive vice president and chief operating officer Jose T. Sio said the approval was made in the form of “written assent of the stockholders representing at least two-thirds of the outstanding capital stock of SMIC…”     

The preferred shares have no voting rights. Instead, a coupon rate is attached to these with specific interest earnings accruing to the shares. They are also nonconvertible to common shares and would be redeemable at the option of the corporation.              

Sio said the issue, pricing and other conditions would be determined by management as the need arises to exercise the funding option.               

The company has an authorized capital of 600 million common shares, of which 586 million are issued and outstanding. It plans to reclassify 10 million of the remaining 14 million unissued shares.        

SMIC, which is the parent company of SM Prime Holdings Inc., Banco de Oro and SM Development Corp., needs at least P10 billion this year to fund various endeavors. Of the estimated capital expense, P2.5 billion will fund the continued development of the SM Bay City, which houses the world’s third-largest mall, SM Mall of Asia. Another P2 billion will go to develop the Hamilo Coast residential resort complex in Nasugbu, Batangas.     

Another P4 billion will pay for the Equitable-PCI Bank shares acquired last October. Another P1.5 billion will fund other property projects, such as the expansion of the Taal Vista Lodge Hotel.               

Last week, SMIC said it would issue $200 million worth of 5-year convertible bonds, proceeds of which would be used to refinance a portion of its maturing obligations and for general corporate purposes.               

The details of the terms and conditions of the convertible bonds would be discussed and finalized with the underwriters Citigroup and Macquarie Securities (Asia) Limited.             

SMIC is issuing the bonds at a time when its shares are trading at all-time highs on account of recent positive corporate developments.

It has consolidated the assets and operations of SM Supermarkets and SM Hypermarts, effectively doubling the revenue and income base of SM retail group.

At of end 2006 stockholders of BDO and Equitable PCI Bank approved the merger of the two banks. The new entity is expected to operate with greater efficiencies due to economies of scale and wider market reach.

http://www.businessmirror.com.ph/01172007/companies03.html