Jollibee to issue up to P12-B perpetual preferred shares

Fast-food operator Jollibee Foods Corporation on Monday announced plans to issue up to P12 billion worth of perpetual preferred shares, which the company will use to partly finance its eyed $250-million buyback program.

In a regulatory filing, JFC said it plans to issue P8 billion to P12 billion worth of perpetual preferred shares by September, the first in its history and what the company said is the first in the food service industry in the Philippines.

The issuance is subject to regulatory approval of both the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE).

JFC said the proceeds will be used to partly finance the planned buyback program of about $250 million of its $600-million perpetual securities issued in January 2020.

“The issuance of preferred shares and the buyback of its USD perpetual securities are parts of an overall plan to strengthen JFC’s balance sheet,” the company said.

The transactions are expected to be fully executed by December, and bring down JFC’s debt obligations, distribute financial maturities over the next few years, lower foreign exchange risks, and improve leverage and debt servicing ratios.

“These transactions will support JFC in maintaining its capability to finance its profitable growth, which is forecasted to accelerate in the next months and years, as the JFC Group plans to open about 450 new stores in 2021 and at least 500 new stores per year in the next few years,” it said.

In the same filing, JFC said it will also file an application with the SEC for the shelf registration of up to 20-million peso-denominated cumulative, non-voting, non-participating, non-convertible, redeemable perpetual preferred shares .

It will have a shelf period of up to three years, at an offer price of P1,000 per share or equivalent to a total amount of P20 billion. The planned initial issuance — with a base offer of P8 billion or 8 million preferred shares — is scheduled this year, with an oversubscription option of up to P4 billion or 4 million shares.

“These preferred shares will come from the reclassification of existing authorized and unissued common shares, thus, they will not increase the total number of authorized shares in JFC’s equity base,” the filing read.

JFC ended May 2021 with a total of 5,815 stores across the globe. Its largest brands by store outlets are Jollibee with 1,492; Coffee Bean & Tea Leaf with 1,052; Chowking with 616; Mang Inasal with 585; and Highlands Coffee with 468.

Other brands of the company include Greeenwich, Red Ribbon, Yone He King, Hong Zhuang Yuan, Burger King, PHO24, Hard Rock Cafe, Dukin, Smashburger, Tim Ho Wan, Tortas Frontera, and Panda Express.

Shares in JFC are trading down by 1.20% to P213.40 apiece as of 11:08 a.m. versus last Friday’s finish of P216.00. —Jon Viktor Cabuenas/KG, GMA News