San Miguel Citrus Restructures US$110.6 Million Loan
- The San Miguel citrus company, a leading lemon exporter and industrial processor, is currently undertaking a debt exchange programme concluding on February 7th.
- Currently, San Miguel has three outstanding ON series bonds totaling US$110.6 million: US$60 million maturing in July,US$34 million in October,and US$16.6 million in February 2027.
- Pablo Ferrari, the company's CFO, explained that the exchange was initiated following increased market demands after the elections.
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What Happened: Debt Exchange and Loan Capitalization
The San Miguel citrus company, a leading lemon exporter and industrial processor, is currently undertaking a debt exchange programme concluding on February 7th. The company expresses optimism regarding the outcome, aiming for a minimum 70% adhesion rate from bondholders. Simultaneously, San Miguel announced the capitalization of a US$15 million syndicated loan obtained in mid-2023, effectively eliminating that debt.
Currently, San Miguel has three outstanding ON series bonds totaling US$110.6 million: US$60 million maturing in July,US$34 million in October,and US$16.6 million in February 2027.
Pablo Ferrari, the company’s CFO, explained that the exchange was initiated following increased market demands after the elections. “It’s for all three series. The proposal is to respect the original value, recognize interest accrued until the date of subscription and to compensate for the lengthening of terms, we offer 15% payment in cash at the time of settlement (NR: it is the 14th of this month).”
Ferrari further clarified that the offered rate was adjusted to unify the bonds into two categories – one linked to the US dollar and the others to the MEP dollar - resulting in an average rate of 8%.He noted positive reception from banks and Alycs (Settlement and Clearing Agents), with final adhesion levels to be determined on February 7th.
Context and Significance: Diversifying Financing and Improving Capital Structure
In June 2023, San Miguel secured a loan from its shareholders, offering a syndicated line to the “control group” to diversify financing sources and strengthen its capital structure. This financing was initially for six months, with automatic renewals for equal periods, up to a maximum of 48 months.
The December 30th announcement regarding the capitalization of this debt signifies a strategic move to settle the obligation and improve the company’s financial position. This action, combined with the debt exchange, demonstrates San Miguel’s commitment to proactive financial management.
Impact and Affected Parties
This debt exchange and loan capitalization primarily affect:
- Bondholders: The exchange directly impacts investors holding the three ON series bonds, possibly altering their maturity dates and interest