Globe Telecom (GLO) has released its preliminary prospectus for its upcoming stock rights offering (SRO). From a P32-Billion planned offering, this was trimmed down to P17 Billion. Ex-date is set on Sept. 16 while offer period will run from Oct. 3 \u2013 Oct. 7. Tentative listing date is set on Oct. 28. Final offer price, which will be pegged at an 18% to 25% discount to GLO\u2019s VWAP, along with the entitlement ratio will be disclosed on Sept. 8.<\/p>\n\n\n\n
Our View:<\/strong> While lower than initially planned, the P17-Billion proceeds, of which 40% will be allocated for debt repayment and the remaining for CAPEX, should provide another reinforcement to GLO\u2019s balance sheet.<\/p>\n\n\n\n Recall that GLO is already expecting P71 Billion in proceeds from its tower sale and 25% of this will be used for debt servicing and the remaining to accommodate its CAPEX. With a combined P25 Billion (equivalent to 11% of GLO\u2019s net debt) from the telco sale and SRO that will be allocated for debt servicing and repayment, these should be adequate to address the overhanging issue of GLO\u2019s larger debt exposure (1.8x net D\/E), particularly on dollar-denominated debt, relative to TEL (1.64x net D\/E \u2013 which should decline further following the utilization of its tower sale proceeds) and CNVRG (0.8x).<\/p>\n\n\n\n Based on our estimates, incorporating the expected proceeds will immediately pulldown net D\/E to around 1.6x-level. Moreover, reduction in debt and sustained expansion should be accretive to both margin and EPS, making up for the potential dilution that may come from the SRO.<\/p>\n\n\n\n We currently have a Target Price of P3,244\/share for GLO. We note that at last traded price of P2,184, the market is already fully discounting its GCASH segment and is ascribing an unwarranted 18% discount to its telco operations.<\/p>\n","protected":false},"excerpt":{"rendered":" Here’s a commentary on an important issue or event affecting the stock market <\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-317115","post","type-post","status-publish","format-standard","hentry","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=317115"}],"version-history":[{"count":2,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317115\/revisions"}],"predecessor-version":[{"id":320527,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317115\/revisions\/320527"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=317115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=317115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=317115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}