JOLLIBEE Foods Corp. (JFC) said it will review its planned issuance of preferred shares, citing the faster-than-expected growth of the company’s domestic business.
“The idea for the preferred shares issuance was for the growth in the Philippines. What we’ve seen recently is our growth in the Philippines is faster than our planned growth,” JFC Chief Financial Officer Richard Shin said during a virtual briefing last week.
“We don’t know how much we really need in terms of preferred shares because our (Philippine) business is actually growing much faster. We’re going to reevaluate and we’re going to consider if we need to do the preferred shares offering,” he added.
In March, JFC’s board approved a plan to offer and issue five million preferred shares with an oversubscription option of up to three million preferred shares at P1,000 apiece, with an estimated total value of up to P8 billion.
This planned issuance will be the second tranche of JFC’s 20 million preferred shares shelf registration approved by the SEC in September 2021.
According to Mr. Shin, the move is also influenced by the local central bank’s expected interest rate cut.
“We’re taking a look at this again, understanding that the rates haven’t come down yet. That’s important because you lock into a fixed rate, whether it’s a coupon or whether it’s interest, at the time of a potential rate cut, that’s probably not the right way,” he said.
“We’re looking at other instruments that are more variable to take advantage of lower interest rates that we know are coming. We are looking at this holistically. We are looking at all the options at the moment,” he added.
Previously, the fast-food giant said a portion of the offering’s net proceeds would be used to refinance financial obligations including the company’s callable Series A preferred shares due October this year and for other general business purposes.
“JFC is undertaking this funding transaction to maintain strong capital structure, robust leverage position, and optimize liquidity by managing maturities of financial obligations,” the company said.
JFC has earmarked P20-23 billion as its capital expenditure budget to fund the company’s plan of opening 700 to 750 new stores this year.
The company’s shares were last traded on July 26, ending at P228 apiece. — Revin Mikhael D. Ochave
