JOLLIBEE Foods Corp. (JFC) said it is withdrawing its plan to issue up to P8 billion in preferred shares due to strong growth in its domestic business and a decision to reduce its 2024 capital expenditure (capex) budget.
“Following careful consideration of all relevant factors and in the interest of achieving the best value for our shareholders, we have made the decision to withdraw our previously announced public offering of Series C Preferred Shares,” JFC Chief Financial Officer Richard Chong Woo Shin said in a statement to the stock exchange on Monday.
“We will explore other capital-raising opportunities, focused on shareholder value and optimization of our capital structure,” he added.
In March, JFC’s board approved an issuance consisting of five million preferred shares with an oversubscription option of up to three million preferred shares at P1,000 apiece, with a value size of up to P8 billion.
The proceeds were supposed to be used for the refinancing of the company’s Series A preferred shares and other general business purposes.
According to JFC, the additional funding from the planned issuance is no longer needed for the refinancing of the Series A preferred shares due to the “strong profit performance and cash flow generation of its Philippine business.”
The company added that the decision to withdraw the preferred shares offering is in support of the plan to reduce its P23 billion capex budget for 2024 by at least 20%.
JFC previously announced that it had earmarked P20-23 billion in capex funding to bankroll the plan of opening 700 to 750 new stores this year.
The company said the preferred shares plan was also dropped due to expected rate cuts later in the year, which would help secure “more beneficial bank loans at floating interest rates.”
The recent acquisition of South Korean value coffee brand Compose Coffee also influenced the decision to withdraw the preferred shares offer, citing the “profit-accretive contribution” from its consolidation with the fast-food giant.
In early July, JFC announced the acquisition of Compose Coffee for $340 million to strengthen its coffee and tea business. The acquisition is projected to be completed by the first half of August.
“JFC expects these factors and considerations will improve its flexibility in funding and in increasing its leverage position. As a result of the withdrawal, no Series C preferred shares will be offered or sold by JFC,” the company said.
On Monday, JFC shares fell by 0.18% or 40 centavos to P227.60 per share. — Revin Mikhael D. Ochave