The Philippines’ largest fast food chain, Jollibee Food Corp., which is controlled by billionaire Tony Tan Caktiong, plans to buy back $250 million of the dollar-denominated perpetual bonds that the company issued last year to fund its international acquisition spree.
To refinance the debt, Jollibee said it will raise as much as 12 billion pesos ($250 million) through the sale of up to 12 million preferred shares, including oversubscription, at 1,000 pesos each. The share sale is subject to shareholder and regulatory approvals.
The share sale is part of Jollibee’s plan “to restructure its financial obligations in order to strengthen its balance sheet, spread the maturity of its financial obligations and reduce its foreign exchange risks,” the company said in a statement to the Philippine stock exchange. “This is also part of its action steps to reduce its debt and financing cost as its businesses in different parts of the world recover from the severe impact of the pandemic.”
Proceeds from the preferred share sale will be used to buy back part of the $600 million in perpetual bonds Jollibee issued in January last year. The perpetual bonds helped Jollibee refinance the short term loans used to acquire Coffee Bean & Tea Leaf in September 2019. In June 2020, the company also raised a further $600 million from the sale of two tranches of senior debt securities that provided contingency measures against the prolonged impact of the pandemic.
Jollibee sank into the red in 2020, with an annual net loss of 11.5 billion pesos, as cities around the world went into lockdowns to arrest the spread of the Covid-19 pandemic. The company returned to the black in the fourth quarter and reported a net profit of 153 million pesos in the first quarter.
“Most of our businesses abroad are reaching sales at pre-pandemic level,” Jollibee CEO Ernesto Tanmantiong said in a statement. “Same store sales growth was offsetting the effect of stores closed permanently due to the pandemic. Our profit and cash flows recovered strongly versus a year ago.”
Overseas outlets accounted for 41% of total sales in the first quarter, the company said. The group will continue its expansion drive overseas, Tanmantiong said in an interview with Bloomberg in March. Jollibee plans to open 450 outlets overseas this year while looking for potential acquisitions, he said.
Founded by Tan Caktiong more than 40 years ago, Jollibee now operates more than 3,200 outlets in the Philippines and over 2,500 overseas—including U.S.-based chains Smashburger and Coffee Bean. The company had to close some 70 outlets overseas as Covid-19 lockdowns around the world negatively impacted dine-in sales at its restaurants.
Tan Caktiong, 68, was ranked No. 9 on Forbes list of the Philippines’ richest people in September 2020, with a net worth of $1.9 billion. With partner Edgar Sia II, he also owns a stake in the fast-growing DoubleDragon Properties.
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