The Securities and Exchange Commission (SEC) had earlier authorized the company to issue up to 10 billion pesos fixed rate bonds in one or two tranches. For the first tranche, the Company decided to issue 5 billion pesos, with an overallotment option to provide some flexibility in the event of an oversubscribed issue. Because of strong demand from retail and institutional investors, the underwriters exercised an overallotment option of 1 billion pesos. The Company and the underwriters priced the issue at 110 basis points over the benchmark rate.
“The success of this bond issue is a major achievement for our company, and is a culmination of management’s adoption and efficient execution of key business strategies over the last few years,” said Mr. Aldrin M. Cerrado, Chief Financial Officer of ABS-CBN. “I am particularly pleased that we were able to price the issue at the lowest end of the indicative pricing range, and achieve broad distribution to retail investors.” BDO Capital and Investment Corp., BPI Capital Corp., and HSBC acted as joint lead managers for the transaction. The company had earlier been given the highest possible rating of PRS Aaa from Philippine Ratings Corporation (PhilRatings).
“I am happy to have started the year with a significant milestone for ABS-CBN, and I hope this bodes well for what we plan to accomplish in the coming years‚” added Cerrado.
Mr. Eduardo V. Francisco, President of BDO Capital, stated: “We are are proud to have played a major role in successfully bringing to market ABS-CBN’s first ever domestic retail bond issuance. The positive response we received from investors reinforces our view that ABS-CBN has earned a solid credit standing among the domestic investing community.”
Proceeds from the bond will be used to finance its capital expenditure program over the next few years. ABS-CBN intends to invest in forward planning for its production process, which includes the construction of sound stages. The planned sound stages will deliver improvements to operations by increasing production quality and reducing costs associated with on-location shoots. Currently, the majority of ABS-CBN’s filming is done on-location. The company will also use part of the proceeds for the roll out of digital terrestrial TV and the expansion of its pay-TV business through Sky Cable.
ABS-CBN is on track for the Philippines’ switch to Digital Terrestrial Television. Test broadcasts are being conducted in different parts of the nation. It has also successfully expanded its business into print, licensing, music, TV shopping, telecommunications and theme parks. Last year, the company started its TV shopping business, A CJ O Shopping, and its cellular telecommunications business, ABS-CBNmobile – which allows customers to view ABS-CBN’s content on smartphones in addition to data, SMS, and voice products. The company also plans to open its educational theme park, “Kidzania,” at the Fort Bonifacio Global City later this year.