For Reference – Arbi Plays (The Conclusion)

June 22, 2015 at 12:59 pm Leave a comment

First. SMC’s disclosure. Possible reason why SMC2A’s trading near face value of 75.

Clarification of News Report
We reply with respect to the news article entitled “SMC seeks refinancing of debt” published in the June 22, 2015 issue of The Standard. The article reported in part that:

“SAN Miguel Corp. and unit Petron Corp. are seeking to refinance debt exceeding $1 billion as interest rates linger near record lows. Their shares surged Friday.

San Miguel, the Philippines’ largest company, may raise funds to partly redeem more than P50 billion of preferred shares, president Ramon Ang said in a June 18 interview in Makati City, without giving a percentage.

. . . .

San Miguel may use its own cash to redeem the rest of its preferred shares, which will pay a higher interest rate in two years if not repaid this year, Ang said.”

We advise that the statements of Mr. Ramon S. Ang, President and Chief Operating Officer of the Company, relating to a possible redemption of the P50 billion preferred shares of the Company, as reported in the aforementioned article, is accurate. The same was previously disclosed by the Company in the Information Statement, dated May 5, 2015, filed with the Securities and Exchange Commission and the Exchange. An appropriate disclosure shall be made to the Exchange if such redemption is pursued by the Company.


Second. A little math.

SMC2B. Div per year = 5.72
SMC2C. Div per year = 6
Difference of 4.90 %

SMC2B price = 85
SMC2C price = 89
Difference of 4.71%

So? Where’s the play? – Wait. The above post is just a distraction.

Third. A simple math.

say u have 1k shares of SMC2C. Selling at 89 will yield 89k
u but then 1k shares of SMC2B at 85, for 85k pesos. Leaving you 4k cash.

1k shares of SMC2C will gives you 6,000 pesos div for a year.
1k shares of SMC2B – 5,720 pesos.
Or 280 pesos of lost dividend because you sold you SMC2C for SMC2B.
but wait, what’s that 4k doin in your pocket?


Here’s another trick.
your 84k proceed will give u 70 shares of Petron Pref Series A (PRF2A) at 1,055 or almost 74k worth.
Leaving you 10k pesos richer. PRF2A gives a 15.75 pesos per quarter pr 63 pesos cash dividend per year.
Your 70 shares, will yield 4,410 pesos per year.
But why change a P4,410 div to P6,000 div if i stick it out for SMC2C? That’s P1,590 additional dividend
for me.
Well right, but which is better?
A) having P10,000 right now or
b) waiting for 6 years to have 10,000? (10,000 / 1590 = 6.2 years)

well of-course, prices of preferred shares by then is another thing.



Entry filed under: Phisix's Closet (PSEi).

For Reference – Arbi Plays Aviso

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