Only $123.9-M submitted on SMC power unit's $400-M tender offer

By MYRNA M. VELASCO

SMC Global Power Holdings Corporation (SMCGP), the energy investment arm of the San Miguel group, reported that it only received $123.934 million worth of securities by its bondholders, way below the $400-million tender offer limit set by the company, indicating confidence in the company's financial strength.

Parent firm SMC similarly announced on Tuesday, Nov. 8, that it subscribed to $85 million of the redeemable perpetual securities issued by SMCGP, the proceeds of which will be used to finance the payment to the holders of the securities exercising the rights under the said tender offer conducted by the SMCGP. As specified by the SMC energy firm, all valid tender instructions have final settlement date on or about Nov. 9.

SMC President and Chief Operating Officer Ramon S. Ang noted that the investors’ reception of the company’s tender offer “is a clear indication of strong confidence in the stability, strength and value of SMCGP,” despite the firm’s hurdles on “skyrocketing global fuel prices and an unfavorable decision by a government regulator on its petition for a temporary rate hike.”

The tender offer targeted to buy back some $400 million worth of SMCGP’s dollar-denominated debts. According to Ang, that has been the company’s way “to allow investors to cash out of the bonds and allay concerns over its finances following the Energy Regulatory Commission’s (ERC) denial of its petition to recover losses from its fixed-rate power supply agreements with Meralco (Manila Electric Company).”

The company expounded that it carried out the tender offer “as part of its proactive approach to managing its capital structure, by using available liquidity sources to repurchase the securities.”

The SMC top executive further indicated “the tender offer has been well received--but an overwhelming majority of investors chose to hold on to the securities.”

He emphasized that the investors who participated in the exercise had been those who opted to cash-in on their bonds; while those who decided to stay have been navigating investment strategy on a long-term approach.

“This development is a strong statement of support for our company and confidence in our ability to navigate existing challenges, honor our obligations and continue to grow the business moving forward,” Ang noted.

SMCGP similarly conveyed the remaining perpetual securities “will continue to be outstanding, with the earliest tranche’s first call date set on April 2024.”

The SMC chief executive further stated that “while the offer was well-received across both onshore and offshore markets--with the relevant securities’ prices trading up ...the final results demonstrate strong investor appetite to maintain participation in the SMCGP credit.”

Ang said the outcome of the tender offer infers that “our investors understand that current market prices do not reflect the true strength of SMCGP and the total San Miguel Group.”

He thus stressed that the SMC group has “never been more confident about the fundamental strength of our businesses, which are so much a part of the fabric of everyday Philippine life. We will prioritize actions to ensure our companies will continue to thrive.”