Jollibee to Manage Debt as Overseas Sales Reach Pre-Covid Level
(Bloomberg) -- Jollibee Foods Corp., the largest Philippine restaurant operator, is cutting its debt and financing costs by selling preferred shares and buying back some of its dollar debts as its businesses recover from the pandemic.
Jollibee will issue as much as 12 billion pesos ($250 million) of preferred shares including oversubscription, and will repurchase as much as $250 million of perpetual bonds this year. It will also reduce its bank loans, the company said in a stock exchange filing, as it seeks to strengthen its balance sheet, spread debt maturity and lower foreign exchange risks.
Jollibee reported a net income of 153 million pesos in the first quarter, swinging from a 1.68 billion pesos loss a year ago. It incurred about 594 million pesos in interest expense on loans.
“Most of our businesses abroad are reaching sales at pre-pandemic level,” Chief Executive Officer Ernesto Tanmantiong said in a statement. “We look forward to a strong recovery of our Philippine business in the months ahead and even faster sales and profit growth of our businesses abroad.” International businesses account for about 41% of Jollibee’s global system-wide sales.
The debt restructuring plan is a “good move” for Jollibee and should help boost its earnings, said Rachelle Cruz, an analyst at AP Securities Inc. in Manila.
“By buying back the dollar debt and replacing it with a peso denominated debt it’s taking advantage of the favorable exchange rate,” Cruz said. “Jollibee can only cut its operating cost by so much since it’s primarily a brick and mortar business. This refinancing and debt cost reduction complements its move of reducing operating costs.”
Jollibee shares fell 0.5% in Manila trading, poised for its fifth straight day of declines.
Read: Jollibee Plans 8b-Peso Preferred Share Sale, Buyback $250m Bonds
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