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Ayala Land units to offer retail bonds

Posted on July 23, 2013 10:39:02 PM [ Businessworld Online ]
TWO SUBSIDIARIES of Ayala Land, Inc. -- Alveo Land Corp. and Avida Land Corp. -- plan to sell retail bonds as soon as next month, according to a document from the Securities and Exchange Commission (SEC).
“Ayala Land comes now with proposed maiden retail bond offerings of its leading, established and fully owned subsidiaries -- Alveo and Avida,” according to a July 17 memorandum to the SEC en banc from the regulator’s Corporate Finance Department.
“With these proposed retail bond offerings, Ayala Land hopes to be able to infuse the market with… new investment choices for both retail and institution investors,” the document added.
“Both Alveo and Avida intend to launch their respective retail bond offerings in August 2013.”
Ayala Land Investor Relations Officer Pamela Ann T. Perez, in a telephone interview yesterday, confirmed the plan, but declined to say how much the Ayala Land subsidiaries hope to raise from the retail bonds.
In a separate text message, Ms. Perez noted, “Ayala Land continually considers all options and opportunities to finance its projects and the projects of its subsidiaries.”
The same SEC document showed Alveo and Avida have asked the corporate regulator’s permission not to appoint independent directors, a requirement for firms with registered equity securities.
The appointment of independent directors, which is a requirement under the Securities Regulation Code, is designed to protect minority shareholders, SEC Secretary Gerard M. Lukban explained in a telephone interview yesterday.
But both companies argued that they are 100% owned by Ayala Land, which means “there are no minority shareholders of either Avida and Alveo.”
“It would thus be unduly burdensome -- without a corresponding minority shareholders benefit generated -- for Avida and Alveo to amend their by-laws, elect directors independent of its only shareholder Ayala Land, and create the committee as prescribed by the manual of Code of Corporate Governance,” they said.
Mr. Lukban said the commission en banc “is still looking into” the petition of Alveo and Avida.
Avida caters to the middle-income market, with product price ranging from P1.5 million to P5 million, while Alveo serves the upscale market with product price ranging from P4 million to P12 million.
If fund raising were to push through, the retail bonds of Alveo and Avida will come after their parent, Ayala Land, on Friday last week launched the first tranche of its P21-billion fixed-rate bonds to help finance capital expenditure.
The first tranche, worth P15 billion with a coupon rate of 5%, will mature on 2024, Ayala Land had said. The public offer will run until 5 p.m. of July 25.
The company has earmarked P65.5 billion for capital expenditures this year -- P46 billion for project completion and roughly P20 billion for land banking -- to bankroll the construction of about 69 property projects worth a total of P129 billion.
Ayala Land in March raised P12.2 billion from a share placement to bankroll the completion of its projects.
Ayala Land’s net income grew by 20.83% to P3.19 billion in the first quarter from P2.64 billion in the same three months last year as revenues climbed 39.35% to P18.52 billion from P13.29 billion.
Yesterday, shares of Ayala Land gained 35 centavos or 1.15% to close at P30.90 apiece from P30.55 each last Monday. -- Cliff Harvey C. Venzon      

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