Bullish SM group still in expansion mode

Posted on July 7, 2008

SM Mall of Asia SM Investments Corp. (SMIC), the listed conglomerate of mall magnate Henry Sy, continues to see opportunities in times of crisis, as seen in the continuing expansion within Mall of Asia.

Hans Sy, one of the sons of the patriarch and president of SM Prime Holdings Inc. (SMPH), said they continue to carry out expansion projects, as there remain “saving graces” in the economy—citing nonstop remittances from overseas Filipino workers (OFWs) and expansion of the business process outsourcing (BPO) sector.

“I think consumer spending has become more concentrated here. Some people, instead of going abroad to shop, opt to just stay here,” he said.

SMIC, through SMPH, operates the largest chain of shopping malls in the country, or 33 by the end of the year.

As far as the MOA complex is concerned, Sy said there is a plan to build a second E-Com building to serve requirements for office spaces as well a 15,000-seater sports stadium, which can also be a venue for concerts. More parking spaces will likewise be built.

The E-Com building will consist of 14 floors. The sports stadium, on the other hand, will sit on a 2-hectare lot and will be cylindrical in shape. It will be ready by 2010.

Construction for all will begin this year.

SMIC said earlier it will sell fixed-rate bonds to raise funds to refinance existing loan obligations.

In a statement, the company, which holds interests in retail, property development and financial services, said it has appointed UBS AG as the lead manager for the issuance.

“The determination of the pricing, terms and conditions, and other features of the bonds are delegated to management to negotiate and finalize with the lead manager,” it said.

It added that a subsequent disclosure to corporate regulator Securities and Exchange Commission and Philippine Stock Exchange (PSE) will be made as soon as the board approves the final issue size, pricing, terms and conditions and other features of the bonds.

SMIC did not indicate how much of its debts will be refinanced. Based on its filing with the PSE, its bank loans amounted to P5.22 billion at the end of the first quarter.

A fixed-rate bond is a long-term debt paper that carries a predetermined interest rate payable at specified dates before bond maturity.

In February 2007, SMIC successfully launched its 5-year convertible bonds. The transaction was expanded to $300 million, including the greenshoe option from the original offer size of $200 million.

Proceeds from the offering were used to refinance a portion of its maturing obligations and for general corporate purposes. Business Mirror