MANILA, Philippinesâ€”Property giant Ayala Land Inc. (ALI) has set an offering of P1.3 billion worth of voting preferred shares to existing common shareholders in June as part of a capital restructuring program meant to obtain leeway to bring in foreign investors.
In a disclosure to the Philippine Stock Exchange on Tuesday, ALI said its board had approved the offering of voting preferred shares at a price of 10 centavos each to ALIâ€™s common shareholders. Each eligible shareholder is entitled to subscribe to one voting preferred share for every one common share held.
The offering of these voting preferred shares will run from June 18 to 22, the disclosure said. In April, shareholders of ALI authorized the company to amend its charter to allow the issuance of 13 billion voting preferred shares.
â€œThis is in accordance with previous approval obtained from the shareholders in April,â€ ALI chief finance officer Jaime Ysmael said.
The dividend rate on these voting preferred shares will be equivalent to the 90 percent of 10-year PDST-R2 benchmark and will be repriced every 10 years. The voting preferred shares will be convertible to one common share for every one voting preferred share commencing on the 10th year after the issuance of the voting preferred shares. They are redeemable at par at the sole option of the company.
This exercise is a capital restructuring exercise rather than a fund-raising. This is meant to comply with the stringent regulatory requirement following the Supreme Courtâ€™s recent ruling that non-voting shares do not count as equity when computing for a companyâ€™s Filipino ownership level. ALI was referring to SCâ€™s ruling on the Philippine Long Distance Telephone Co. case that favored the petition of the late human rights lawyer Wilson Gamboa.
The SCâ€™s ruling redefined equity for purpose of compliance to the 40-percent foreign equity limit on key industries like property and utilities. If non-voting preferred shares were included as part of equity, ALI currently had a foreign ownership of 20 percent but if preferred shares were included, 39 percent of its equity is held by foreign investors, thus nearing the maximum level.
While it has not breached the 40-percent limit, it is nearing this threshold. ALIâ€™s move is thus seen as a crucial step for the company to still get a good share of foreign investment inflows that are lifting the local stock market to unprecedented highs.
The capital restructuring is also in line with ALIâ€™s expansion plans. ALI plans to roll out 67 new projects worth P90 billion this year alone as part of its â€œunprecedentedâ€ expansion across new locations and new market segments in the country.
The record expansion is in line with ALIâ€™s target to chalk up an annual net profit breaching P10 billion by 2014, equivalent to a return on equity of 15 percent. Likewise part of its expansion plan is to double land bank over the medium term from 4,000 hectares at present.
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