Vol. XXII, No. 60-A [ BusinessWorld Online ]
Saturday, October 18, 2008 | MANILA, PHILIPPINES
Ayala Corp., the country’s largest conglomerate, has received regulatory approval on Thursday to sell 12 million new preferred A shares worth P6 billion for the expansion of its business process outsourcing (BPO) units.
Ayala Corp. expects to generate net proceeds worth P5.95 billion from the sale of the preferred shares, document filed with the Securities and Exchange Commission showed. The shares are worth P500 each and are not convertible to common shares.
The firm said it will use the money to "expand its direct investments in BPO companies such as but not limited to eTelecare Global Solutions, Inc., Affinity Express, Inc. and Integreon Management Solutions, Inc."
Last month, Ayala Corp. and US-based investment firm Providence Equity Partners, Inc. bought eTelecare for $290 million. The partners have decided to delist the share of eTelecare from the NASDAQ after the completion of the purchase.
Ayala Corp., which would contribute around $100 million for eTelecare, said it intends to use a portion of the share sale to finance the acquisition balance coming from internally generated funds.
The firm said it plans to invest approximately $8.25 million and $14.1 million, respectively in Infinity and Integrion. It said that any remaining proceeds may either be invested in other BPO companies depending on favourable business opportunities that may arise or be included in the company’s general working capital.
In a telephone interview, Ayala Corp. Treasurer Ramon G. Opulencia said the firm decided to issue preferred shares so as not to the dilute the holdings of common shareholders.
"We want to issue an instrument that is debt like but with equity features," he said adding that the shares will have a fixed dividend rate that the company will set upon the issuance.
Mr. Opulencia said the company is trying to take advantage of the relative insulation of the local capital markets from the financial turmoil abroad since the company believes international capital markets are closed now.
Summit Securities President Harry Liu said in a telephone interview that given lingering uncertainties about the market, Ayala Corp.’s share sale must be for institutional investors, which have long positions, rather than individual investors.
Ayala Corp. has chosen as underwriters First Metro Investment Corp., HSBC, ING and its unit BPI Capital Corp., which will also serve as issue manager. The four may underwrite up P1.5 billion each, the firm said.
The participating underwriters are Banco de Oro Capital and Investment Corp. Insular Investment and Trust Corp. Landbank of the Philippines, and the Rizal Banking Corp. Capital and Viscal Investment, Inc.
"This is the first time the company will list preferred A shares but the company listed preferred B shares in 2006 worth P5.8 billion," Mr. Opulencia said. — Don Gil K. Carreon
