[nelson]

Any insight regarding San Miguel Corp preferred shares offering? Paging Bauer, richpulubi & other PMTers, hope you can chime-in your expert opinion. Here's the link

          http://business.inquirer.net/76027/sec-approves-san-miguel-preferred-share-offering

[edspecks2004]

pwede ka ba mag pre-terminate sa ganito? if yes, anong penalty?

[bauer]

@nelson,

Ang SMC preferred shares to be sold (about 80B pesos) ay gagamitin na pambayad ni SMC sa government para hindi na shareholder ang gobyerno sa SMC at para makatipid sila sa interest payments.  Tingin ko sobrang laki nito at hindi naman lahat ay pambayad talaga baka yung ibang pondo ay for 'other corporate expenditures'.

Sa mga prospective buyers:

Ang preferred shares are non-voting at fixed ang interest payments.  Ito rin ay perpetual so hindi ito pwede basta bawiin ng investor kung walang kapalit na new buyers.  Siguro plano ng SMC later na secondary listing sa PDEX pero hindi natin masabi sa ngayon due to lack of information.

Risk:  Kapag nagdeclare ng bankruptcy ang SMC, sino una babayaran sa natirang pondo at asset? preferred shares ba or creditors? Yan ang hindi rin sigurado.

Kapag dumating ang panahon na ang interest rates sa market ay over 8% per annum, ang fixed interest rate mo na 7.5% ay tiyak na mababa kaya sa oras na yun kung gusto mo ibenta sa secondary market, malamang bentang palugi ang mangyayari.

Ano mga katangian ng mga investors na bibili sa SMC shares?

1. marami silang pera o pondo na nakalagak sa iba pang investment
2. sobra tiwala nila sa SMC na hindi ito magsasara kahit mamatay na sila (investor)
3. tingin nila ay hindi tataas sa 8% per annum ang interest rates sa open market sa susunod na 10 taon o higit pa.
4. wala silang balak ibenta KAHIT KAILAN ang SMC shares at ipapamana na lang nila
5. meron silang living will
6. kung sakaling magkaroon sila ng emergency expense, alam nila na hindi pwede galawin ang SMC shares at meron silang ibang source ng pondo.

[nelson]

Hope others can join in and share their opinions. The offered rate in tempting considering prevailing rates are quite low.

[yllor]

just my understanding for what i read in a portion of SMCP2 and an overview from their prospectus:

1. it is divided by sub-series: subseries-2a @7.5%pa; subseries2b @ 7.625%pa and subseries-2c @ 8.0%pa. although it is not guaranteed as cash dividends
2. there is a potential that SMCP2 will be listed in PSE and to be traded if it will be approved (same case with SMCP1) at tentative date of not later than 12 Oct 2012.

For those who will be investor: READ the SMC Prospectus which can be downloaded at PSE website under disclosure.

[GoodSteward]

4. wala silang balak ibenta KAHIT KAILAN ang SMC shares at ipapamana na

Nice points Boss Bauer!!

As to number 4, im not sure , but di ba the preferred shares offering has maturity of 5, 10 years? So there are also people who plan to subscribe and hold it until maturity...Im planning to din actually. Just want to clarify if its really indefinite? Maturity is maturity right? TIA!
-------------------------------

Just received email from bank's trust dept.

TERMS OF THE OFFER
Facility Series “2” Cumulative non-voting Perpetual
Preferred Shares (“Preferred Shares”)
Issue Size Php72.0 billion, with an Overallotment
Option of up to Php8.025 Billion
Offer Price P75.00 per share
Dividend
Rate
Series 2A: 7.50%
Series 2B: 7.625%
Series 2C: 8.0%
Use of
Proceeds
Refinancing of SMC’s existing P72.8 Billion
Series 1 perpetual preferred shares with
balance for general corporate purposes
Dividend
Payment
Quarterly
Call Option Series 2A: starting end of 3rd year
Series 2B: starting end of 5th year
Series 2C: starting end of 7th year
Dividend
Step-up
Series 2A: End of the 5th year
the 10Y PDST-F + 300 bps.
Series 2B: End of the 7th Year
the 15Y PDST-F plus 300 bps.
Series 2C: End of the 10th Year
the 20Y PDST-F plus 300 bps.
For all tranches, minimum rate is
equivalent to the original dividend rates.
Minimum
Lot
P37,500 (500 shares) and in increments of
P7,500 (100 shares)
Offer
Period
August 13 – September 14, 2012

I think Boss Bauer, you are right, di pala maturity, call option lang pala...

Scrap the idea of purchasing na...

[tibaktrader]

Maraming salamat po Sir Bauer sa klarong pagpapaliwanag ng SMC preferred shares. Tanong ko lang po kung may posibilidad din ba na mas mababa ang call price kaysa sa initial offer price sa pagkakataong biglang i-exercise ng kumpanya ang call option para sa SMC preferred shares?

Tanong ko rin po kung madalas din ba nangyayari sa Pilipinas ang pagkakaroon ng missed dividend payments sa mga preferred shares? O napapatupad talaga ang regular na pagbabayad ng dividends? Wala pa kasi akong karanasan sa pag-invest sa preferred shares. Kahit cumulative pa itong ilalabas na SMC preferred shares, mahirap pa rin kung malaki ang posibilidad na patalon-talon ang pagbabayad ng dividends. 

[bauer]

@Goodsteward,

I stand corrected.  Yung binanggit ko earlier na perpetual shares, ang information na ito ay nadampot ko sa newspaper natin (press release).  Ito na nga ang mahirap sa press release eh, most of the time inaccurate, nagkamali tuloy ako ng payo.
Post Merge: Aug 17, 2012, 11:51 AMAng fixed rate dividends payment sa isang corporate bond issue, normally, ay nagbabayad sa takdang oras na ipinangako ng kumpanya.  kung hindi sila nakabayad, malamang mag declare na ito ng bankruptcy.

sa kukuha ng SMC preferred shares, ask your bookrunner kung may kaltas na 20% witholding tax yung gross interest rates.

As for myself, I will not subscribed to it kahit pa 10% ang interest rate.
Post Merge: Aug 17, 2012, 11:52 AM@tibaktrader,

In this case (SMC preferred shares), ang CALL OPTION feature ay pabor sa investor.

[GoodSteward]

@Goodsteward,

I stand corrected.  Yung binanggit ko earlier na perpetual shares, ang information na ito ay nadampot ko sa newspaper natin (press release).  Ito na nga ang mahirap sa press release eh, most of the time inaccurate, nagkamali tuloy ako ng payo.
Post Merge: Aug 17, 2012, 11:51 AMsa kukuha ng SMC preferred shares, ask your bookrunner kung may kaltas na 20% witholding tax yung gross interest rates.

@tibaktrader,

In this case (SMC preferred shares), ang CALL OPTION feature ay pabor sa investor.

Actually @Bauer,tama yun naunang post niyo before the above one, walang maturity yun SMC preferred share.

Yun Call Option naman, its SMC who has the call option if they want to "buy back" the share when the time comes. So there is a chance that in an investor's lifetime di babalik sa kanila ang capital.

And ya, there is 10%tax sa interest payout.


@tikbaktrader, Initial Offer Price daw pa din ang basis call option, wont be the market value.

And yun rate safe at least at 7.5%, wont go lower than that. If they dont exercise their call option, the new rate will be +300 basis points of the prevailing interest rate.

[bauer]

Additional info.

i abstain from this preferred shares offer by SMC because i believe SMC is TOO MUCH IN DEBT already.  kapag sumama ang takbo ng cash flow, matinding problema sa cash ang aabutin nila.

we should always remember, ang Corporate bond like preferred shares is a form of DEBT or LEVERAGE by a company.  Buti pa ang equity shares, hindi obligado ang kumpanya magbayad ng interes pero sa corporate notes, preferred, corpo bond, warrants, etc ay obligado sila magbayad ng interes.


Kaya lang buti na rin kung mabubuo ng SMC ang 80 billion para mabayaran na nila ang gobyerno sa shares ng mga coconut farmers.  yun nga lang yung mga bumili naman na mga investors ang medyo magdadala ng risk. anyway, para ako sa kapakanan ng farmers kesa sa investors.

[Futurama]

Salamat sa mga impormasyon dito marami akong natutunan... Gusto ko lang malaman kung kelan ba ngsimulang magkaroon ng maraming utang ang SMC? I think Danding Cojuangco is out in SMC... it made me think after I have read your discussions... since I'm considering to buy this preferred shares of SMC...
What would it be to buy or not?

[katsky]

sa disclosure it says that the par value is 5 pesos. how does the par value affect the:

1) face value of the stock?
2) dividend payout?

[tibaktrader]

Thanks Sir GoodSteward and Sir Bauer for your responses. Tulad niyo Sir Bauer para rin po ako sa kapakanan ng farmers kaysa investors.

Pinag-iisipan ko pa rin kung bibili o hindi. Buti na lang may konting panahon pa para pag-isipan at pag-aralan.

[bauer]

sa disclosure it says that the par value is 5 pesos. how does the par value affect the:

1) face value of the stock?

par value does not affect the face value of the preferred shares.  Par value is just an accounting term usually use for regulatory requirement for computation of government fees.  

Likewise, par value does not affect dividend payout.

[prodlinetrading]

a bank manager is offering smc preferred stock, min is 1000shares at p75/share. is anyopne familiar with this. di ko naiintindihan but i am quite interested. perpetual daw ito, di ko maintindihan, does it mean nandun na lang yung investment ko and tatanggap na lang ako ng dibidendo? panu yung principal ko?