Jollibee Foods Corporation is planning to issue up to P12 billion worth of Peso Preferred Shares as well as buy back up to $250 million worth of its USD Perpetual Bonds through a Cash Tender Offer within 2021.
In a statement, the firm said the issuance of preferred shares is subject to the approval by shareholders of JFC to be sought during JFC’s annual stockholders’ meeting scheduled on June 25, 2021, and the approval by the Securities and Exchange Commission.
This planned preferred share issuance will be the first by JFC and one of the first in the food service industry in Asia.
JFC’s objective in this plan is to restructure its financial obligations in order to strengthen its balance sheet, spread the maturity of its financial obligations and reduce its foreign exchange risks.
This is also part of its action steps to reduce its debt and financing cost as its businesses in different parts of the world recover from the severe impact of the pandemic.
As of the first quarter of 2021, sales from its businesses outside the Philippines which now account for 41.1 percent of its global system wide sales were reaching pre-pandemic levels.
JFC disclosed that it generated P1.5 billion in operating income in the first quarter of 2021 versus a loss of P1.2 billion in the same period last year.
The firm issued US$600 million in senior debt securities in June 2020 as a contingency measure against unforeseen impact of a prolonged pandemic.
JFC will apply for shelf registration of up to P20.0 billion to issue Philippine Peso-denominated cumulative, non-voting, non-participating Perpetual Preferred Shares with planned initial issuance of P8.0 billion equivalent to 8 million preferred shares with an oversubscription option of P4.0 billion equivalent to 4 million preferred shares, in 2021.
The initial issuance shall be issued in up to two sub-series and may have step up dividend rates if they are not redeemed within three years or five years.
The preferred share issuance will also not affect the current cash dividend policy and its implementation since JFC's total financial obligations will hardly change since the issuance of preferred shares will be mostly offset by a reduction in other financial obligations such as the reduction in the amount of the USD Perpetual Bonds.
In addition to buying back some of the US dollar Perpetual Bonds, JFC plans to reduce its other financial obligations in the form of bank loans within 2021.
In January 2020, JFC through its wholly owned subsidiary JWPL (Singapore) issued US$600 million in Perpetual Bonds maturing in 2025 and in June 2020 US$300 million in Senior Debt Securities maturing in 2026 and US$300 million in Senior Debt Securities maturing in 2030.
US#400 million from the perpetual bond was used to pay off short term loans used mostly for the acquisition of Coffee Bean & Tea Leaf in September 2019 while those from senior debt securities served as contingency measure against unforeseen adverse impact of a prolonged pandemic.