Tony Tan Caktiong’s Jollibee drops 8 billion peso share offering, cites improved financial flexibility

Local fast food giant Jollibee Foods Corp. (JFC), founded by billionaire Tony Tan Caktiong, has canceled its planned 8 billion peso preferred stock offering as the company reviews its capital strategy to maximize shareholder value.

In a filing with the Securities and Exchange Commission and the Philippine Stock Exchange, JFC announced that it is withdrawing its application to issue up to 8 million preferred shares. The company initially sought to raise funds to refinance its Series A Preferred Shares.

Chief Financial Officer Richard Shin explained: “After careful consideration of all relevant factors and in the interest of achieving the best value for our shareholders, we have decided to withdraw our public offering of Series C Preferred Stock.”

Shin noted that JFC will explore alternative capital raising opportunities aimed at optimizing shareholder value and capital structure. The company’s revised approach is influenced by several factors, including the strong earnings performance and cash flow of its Philippine operations.

Other considerations include JFC’s decision to cut its P23 billion capital expenditure budget for 2024 by at least 20 percent, expected interest rate cuts that would allow for more favorable bank lending, and the positive impact from the consolidation of Compose Coffee.

JFC expects these factors to improve financing flexibility and strengthen its leverage position.

Home-based fast food giant Jollibee Foods Corp. has abandoned its planned 8 billion peso preferred stock issuance as it seeks the best value for its shareholders

In a filing with the regulator, JFC said it was withdrawing its application to offer up to 8 million preferred shares, which it filed with the Securities and Exchange Commission and the Philippne Stock Exchange last June.

Richard Shin, Chief Financial Officer of JFC, said: “After careful consideration of all relevant factors and in the interest of achieving the best value for our shareholders, we have decided to withdraw our previously announced public offering of Series C preferred shares.”

Shin said the company will “explore other opportunities for capital raising, focused on shareholder value and optimizing our capital structure.”

The proceeds from the fundraising program were intended for the refinancing of JFC’s Series A preferred shares.

However, JFC believes that the additional financing that would have been obtained from the public offering of the Series C Preferred Stock would no longer be necessary for the refinancing of the Series A Preferred Stock, primarily due to the strong earnings performance and cash flow generation of its Philippine operations.

Other factors JFC is considering in its decision to withdraw the public offering of the Series C Preferred Shares include its plan to reduce its P23 billion CAPEX budget for 2024 by at least 20 percent; interest rate cuts expected later this year that would allow JFC to obtain more favorable bank loans at floating interest rates; and finally, the earnings-boosting contribution from the consolidation of Compose Coffee.

JFC expects that these factors and considerations will improve the flexibility in its financing and increase its leverage position.