Share Comment: Globe Board Approves P32-B Rights Offering

The Globe Telecom [GLO 2092.00 5.77%] [link] the board approved a plan to conduct a stock rights offering (SRO) to raise 32 billion pesos from existing shareholders.

The shares will come from the increase in GLO’s authorized share capital which was already approved by the board of directors and shareholders in April.

GLO will use SRO money to “accelerate growth” and support “strategic initiatives,” including “mobile and broadband-related” investments, and debt repayment of “loans used to fund infrastructure spending.” capital”.

GLO selected BPI Capital, the investment banking subsidiary of its sister company, BPI [BPI 93.50 1.37%]to be the “unique global coordinator” of the OAR.

BPI Capital and PNB Capital will be co-managers for the part of the SRO that will be sold in the Philippines. No word yet on the really important details, like dates, price or duty ratio.

MB RESULTS

It’s refreshing to see a big company like GLO go to market to cash in on something related to growth, like capital expenditure, and not something related to survival, like working capital.

I’ll reserve my opinion on the SRO itself until I have a chance to see in more detail what GLO will be using the money for, specifically, and what kind of rebate and entitlement ratio we’ll get for the actual SRO shares.

At current prices, GLO would need to sell about 15.3 million ordinary shares to raise 32 billion pesos, which would be (very roughly) about 1 SRO share for every 10 GLO shares. Of course, the actual SRO stock price could be quite different from my estimate.

It’s up to GLO’s board of directors to decide what kind of discount existing shareholders should get for having to respond to this capital call.

The larger the discount, the higher the duty rate. It’s interesting to see GLO and the Ayala Group moving forward with an SRO for GLO after canceling the share swap and follow-up offer with ACE Enexor [ACEX 8.00] and AC energy [ACEN 7.34 0.55%] just a few weeks ago due to “market conditions”.

Don’t try to infer anything here! I just felt that canceling this whole transaction was irrelevant for the band. I will update here as GLO makes new details available to the public.

About Barbara J. Ross

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