E-Malt.com News article: The Philippines: San Miguel Brewery seeking to replace one of the conditions of its P38.8 bln issue

San Miguel Brewery Inc., the country’s top beer producer, is seeking the approval of its bondholders for the replacement one of the conditions of the P38.8 billion issue, Manila Bulletin reported on December, 3.

In a disclosure to the Philippine Stock Exchange SMBI said it wants to replace the minimum Current Ratio of 1.00 in the terms and conditions of its fixed-rate bonds issued in 2009, with a minimum Interest Coverage Ratio (Consolidated EBITDA/Gross Interest Expense) of 4.75.

“The minimum Interest Coverage Ratio is a more appropriate measure in monitoring the financial health of the company as it gives an indication of whether SMB has sufficient margin in operating profit to cover increases in the cost of debt,” SMBI said.

SMBI added that the minimum Interest Coverage Ratio is “believed to be a stronger measure of protecting the interest of lenders, as it provides an early sign of the company’s ability to manage liabilities.”

The brewer said it will undertake solicitation of the consent of the majority of its bondholders for the replacement of the Current Ratio.

Consent letters will be sent out to all holders of the SMB bonds as of December 8, 2011. All bondholders as of such record date are to send in their replies before January 20, 2012 and coordinate with their respective banks and brokers.

SMB continues to be a solid leader in the Philippine beer industry, with a market share of approximately 96 percent in 2010.

In October, the Philippine Rating Services Corporation (Philratings) maintained the existing PRS Aaa issue rating for SMB’s bonds.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk and the obligor’s capacity to meet its financial commitment on the obligation is deemed to be extremely strong.

PhilRatings said its rating reflects SMBI’s strong market position domestically; experienced management and production team, with technical support from Kirin Holdings Company, Limited; high cash from operations and cash reserves relative to current debt; sustained financial flexibility and adequate capitalization.


07 December, 2011