Commentary on the shares: AboitizPower asks the SEC for the 2nd tranche of registered bonds with a value of P12 B
The Aboitiz family’s power generation branch said it intends to sell up to 12 billion pesos of bonds from its 30 billion peso record and will proceed with the sale in the fourth. quarter of this year in “one or two series”.
AboitizPower [AP 31.00 4.03%] will use the money raised to refinance the Series E 2020 bonds it has issued, which are expected to mature in 2022.
Anything that remains will be used to “partly finance the equity contributions for the construction of the 74 MW solar power plant in Pangasinan province, general corporate objectives and other future renewable energy projects” .
Debt management isn’t sexy, but it’s the kind of thing that helps the bottom line and helps prevent cash flow problems.
AP is doing the corporate finance version of what people around the world are doing as part of their personal finance system: identify high interest debt and pay it off in cash or with debts signed at a lower interest rate. This is the functional equivalent of taking out a personal loan of 40,000 pesos at 7.5% interest to repay the 40,000 pesos balance of an older personal loan that has an interest rate of 8.5. %.
AP also has the option of making some small adjustments to the terms of the bond that may be more advantageous to it compared to the current terms of the bond that will be redeemed. As I said, juggling debt is not a front page topic, but it is a reality for infrastructure companies and utilities.
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