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SM holding firm seeks SEC okay for P10-B bond sale

Vol. XXII, No. 178 [ BusinessWorld Online ]

Tuesday, April 14, 2009 | MANILA, PHILIPPINES

LISTED HOLDING firm SM Investments Corp. (SMIC) has asked regulators to approve a maiden sale of up to P10 billion worth of bonds to raise funds for operations and new property projects.

In a filing with the Securities and Exchange Commission, the holding firm of mall magnate Henry Sy, Sr. said it plans to sell next month P5 billion worth of five- and seven-year fixed rate notes, with an option to increase the offer by P5 billion more in case of strong demand.

It would be the first time for SM Investments to sell the bonds to the public, having opted to borrow from large financial institutions before.

The firm expects net proceeds of the sale, to be underwritten by Sy-owned BDO Capital & Investment Corp., to reach P9.89 billion. The bonds could be bought for a minimum of P20,000 and in multiples of P10,000 thereafter.

SM Investments said it would use the money to build new malls, for the development of the SM Mall of Asia Complex in Pasay, for the high-end coastal resort Hamilo Coast in Batangas, and for residential projects.

The company said capital spending would reach P25.8 billion this year, P13.3 billion of which would be allotted for real estate and tourism projects.

SM Investments was among the three groups that qualified to participate in the project of the Philippine Amusement and Gaming Corp. to develop 85 hectares of reclaimed land from the Manila Bay into a gaming and leisure complex.

Mall developer and operator SM Prime Holdings, Inc. plans to spend P6.5 billion to acquire land and build new shopping centers.

The SM group has 33 malls in the Philippines and three in China.

SM Investments also intends to set aside P6 billion to expand its network of department stores, supermarkets, hypermarkets and other retail operations.

Chief Financial Officer Jose T. Sio said the SM group’s budget would come from multiple sources.

"The P25-billion capital budget will be funded by [SM Investments] and various subsidiaries from their existing cash balances, internally generated funds from operations and from borrowings," he said.

SM Prime plans to open malls in Pamplona, Las Piñas; Rosario, Cavite; Sta. Ana, Manila; and Naga. SM will also continue he expansion of its mall in North Edsa, Quezon City. — Don Gil K. Carreon


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