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SM sets P80B for 2014 capex, plans new bond offerings

SM Investments Corporation is allotting P80 billion for capital expenditures this year, up from P65 billion in 2013, which will be partly fund by planned peso and dollar bond issuances.

At the sidelines of a COL Financial Group summit, SMIC senior vice president for Investor Relations Corazon Guidote said the bulk of P70 billion of the capex will be for real estate unit SM Prime Holdings, P5 billion to P6 billion for its retail business and the balance for its banks.

SM Prime chief financial officer Jeffrey Lim said they are planning to raise P20 billion from the issuance of retail bonds sometime in the second quarter or in the second half of the year.

Lim said “the plan to tap the capital market is shelved for now given the price of SM Prime. So we will work on other alternative funding options, especially on the debt side.”

Since SM Prime will need more funds, Lim said that, “apart from the peso (bonds), we are also looking into the syndication of US dollar (bonds) for our China requirements of up to US$300 million.”

For the peso bonds, SM Prime is looking at longer tenors of 7 to 10 years while the dollar bonds will probably have a maturity of five years, or a maximum of seven years.

Lim said SM Prime has secured a new property of about six to eight hectares in Jiangsu province for mall development. Construction is expected to start next year with completion targeted for 2016.

The firm now has five malls in China, with two more under construction. Lim said one will open before the end of the year, the other one will open next year.

SMIC is looking at ramping up the expansion of its retail business through its recent investment of a 34 percent stake in CityMall Commercial Center Inc. of Double Dragon Properties Corporation.

SM investor relations officer Timothy Daniels said its food retail formats comprising of supermarkets, hypermarkets, Savemore and WalterMart have the option to put up branches in the CityMalls.

CMCCI will develop a hundred CityMalls to become the country’s largest network of branded community malls by 2020. They will be located mostly in the Visayas and Mindanao, which account for just a fifth of SM’s food retail store count.