Tuesday, February 22, 2011

Ayala hikes authorized capital amid plans to invest in power

Business World Online
Posted on February 22, 2011 10:48:52 PM

THE BOARD of directors of Ayala Corp., the country’s oldest conglomerate, has approved a 20% stock dividend and an increase in authorized capital by more than half to P56.2 billion to ensure “flexibility” in fund-raising.

Higher authorized capital, which will result in fresh funding, will allow expansion into power and infrastructure, the listed company said in a disclosure yesterday.

Following a special meeting, the board of directors approved the declaration of a 20% stock dividend to holders of its common shares.

It also allowed “the increase of the authorized capital stock from P37 billion to P56.2 billion.”

“We believe this is a good way of balancing the need to provide our shareholders steady returns and value as we continue to actively explore new investment opportunities,” Ayala Corp. Chairman Jaime Augusto Zobel de Ayala said in the disclosure.

The conglomerate said it wanted to increase capital “for flexibility for future funding requirements.”

Ayala Corp. is “essentially looking at power sector, some infrastructure projects that may have potential synergy for the group,” it added.

The board approved the increase in the number of its common shares to 900 million from 596 million at a par value of P50 per share.

The firm plans to create “40 million Series C preferred shares, with a par value of P100 per share and the same basic features as our Series A and B preferred shares.”

Ayala Corp., in an e-mail, said Series A and B preferred shares are redeemable, cumulative and non-participating, non-convertible, non-voting, and do not have pre-emptive rights.

Meanwhile, the Securities and Exchange Commission will finalize the record date for the stock dividend.

The stock dividend will increase the company’s outstanding common shares to 583 million from 485 million, or an additional P33.418 billion based on the closing price of P341.00 per share yesterday.

The company last declared a 20% stock dividend in 2008 and has consistently paid regular cash dividends of P4.00 per share.

In December 2006, Ayala Corp. increased its authorized capital to P37 billion from P26 billion.

The conglomerate paid shareholders a cash dividend and a 20% stock dividend.

Ayala Corp. is into property (Ayala Land, Inc.), banking (Bank of the Philippine Islands), telecommunications (Globe Telecom, Inc.), utilities (Manila Water Co., Inc.), power generation exploration (Michigan Power, Inc. under a joint venture with Diamond Generating Asia Ltd. of Mitsubishi Corp.), electronics (Integrated Microelectronics, Inc.), car dealership (Ayala Automotive Holdings Corp.), business process outsourcing (LiveIt Solutions, Inc.) and international investments (AG Holdings, Ltd.).

Sought for comment, Grace C. Cerdenia, analyst at brokerage firm 2Trade-Asia.com, said: “The increase in capital should help support the stock dividend declaration.”

“They have already mentioned that they will venture into businesses outside their core businesses. Several companies have already gone to these undertakings to improve returns on investment,” Ms. Cerdenia said in a phone interview.

The company’s profits rose by a fifth to P6.8 billion in the nine months that ended in September last year compared with the previous year.

As of end-September last year, Ayala Corp. had around P30 billion in cash and a net debt-to-equity position of 10%.

Shares in the holding firm, which was founded in 1834, rose by P3.00 to P341.00 apiece yesterday. -- 
Neil Jerome C. Morales

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