Prospectus by IP Converge Data Center, Inc.

This Prospectus by IP Converge Data Center, Inc. is cleared for public viewing by the Philippine Stock Exchange.

Click here to access and/or download IP-Converge’s FINAL Prospectus as of November 24, 2010.

IP Converge Final Prospectus_24Nov2010.pdf

 

San Miguel to sell $3B in shares in 2011

MANILA, Philippines—Publicly listed San Miguel Corp. will raise up to $3 billion from the equities market early next year by selling existing shares currently held by the diversified conglomerate. In an interview, San Miguel president Ramon S. Ang said these “re-issued” shares would likely be priced between P150 and P200 apiece, given the company’s existing and future business prospects. His comments pushed up the firm’s stocks to a 20-year high, ending at P105 per share Thursday on the Philippine Stock Exchange. San Miguel’s share price has risen by a total of 41 percent over the last month due to optimism over itsnew businesses and speculation over its share sale. Ang said proceeds from the sale would be used to fund the conglomerate’s ongoing expansion in the power and infrastructure sectors. “We can do this as early as the first quarter of 2011,” he said on the sidelines of the government’s Infrastructure Summit in Pasay City on Thursday. “The market clamor is growing.” The international conference was meant to draw in prospective investors that would bankroll President Aquino’s public-private partnership (PPP) scheme. Ang explained that the common shares to be sold would come from the company’s existing holdings, as well as from its current roster of major stockholders, all of whom would release a portion of their holdings to the market on a pro-rated basis. The San Miguel chief had earlier revealed plans to sell up to 30 percent of existing common shares next year, boosting in the process the company’s stock tradingliquidity. Based on Thursday’s closing price at the PSE, 30 percent of San Miguel’s 2.31 billion outstanding common shares would be worth P138 billion, or about $3.1 billion at the upper end of Ang’s indicated price range. At the lower end, the company would be able to raise at least $2.3 billion. San Miguel, which was recently dropped from the PSE’s 30-company main-share index, is not as actively traded as other blue chips partly because of its small public float. Only about 8 percent of its shares are currently held and traded by the public. About 89.5 percent of San Miguel’s outstanding capitalstock is held by Top Frontier Investment Holdings Inc., which is majority owned by an investor group that includes former Trade Minister Roberto V. Ongpin, businessman Iñigo Zobel and condiments king Joselito Campos. San Miguel itself is the single biggest voting bloc owning 49 percent of Top Frontier, which also holds a “continuing and exclusive” option to purchase and acquire the 15-percent stake held by tycoon Eduardo “Danding” Cojuangco Jr. until Nov. 19, 2012.

 

Mang Inasal owner shares pain of letting go

MANILA, Philippines – The owner of Mang Inasal Philippines Inc., which was recently sold to giant Jollibee Foods Corp., said letting go of his chicken-based business was “painful.”

In a letter to his “Mang Inasal Family,” Edgar Injap Sia II expressed “deep sadness” like a “father parting with his child” as he hands over the care of the restaurant to the giant conglomerate.

Sia, who is in his 30’s, founded Mang Inasal on December 2003. In a 250-square meter space in the parking lot of Robinsons Place in Iloilo City, he started to offer the tasty vinegar-marinated chicken served in skewers and paired it with unlimited rice, an almost irresistible come-on. Innovating further, he began offering the menu in the familiar fast food dine-in concept. Business grew by leaps and bounds, conquering markets beyond Visayas, including Metro Manila, the make-it-or-break-it city.

For Mang Inasal’s phenomenal growth—about 100 new stores a year—Sia was recognized this year as the Small Business Entrepreneur awardee in Ernst & Young’s annual search for Entrepreneur Of The Year-Philippines. The same group named Jollibee founder Tony Tan Caktiong as its first awardee in 2004. Caktiong went on to win the World Entrepreneur of the Year title at an awards ceremony in Monte Carlo, Monaco.

Currently the 6th largest fastfood chain in the country, Mang Inasal was dubbed by a local magazine, almost prophetically, as “the new Jollibee.”

Growth was fueled by franchising, which started only in 2005. Of the 303 Mang Inasal branches, only 24 are company owned. Franchise holders of the 279 stores paid P800,000, about the same amount as Sia’s seed money when he started the business 7 years ago.

That Jollibee will be paying P3 billion for a 70% stake in Mang Inasal has made Sia “a very successful businessman,” according to bloggers and online commentators. The buying price of Jollibee, which courted Sia for the transaction, values the entire Mang Inasal business at P4.3 billion. Not a bad deal for a business that has an estimated annual total revenues of P2.6 billion and system wide sales of P3.8 billion.

Since Sia’s holding company, Injap Investments, will continue to hold on to 30% of Mang Inasal, the Jollibee deal actually valued Sia’s remaining stake at a staggering P1.3 billion. By the way, Sia already received a P200 million downpayment.

Still involved

In his letter, however, Sia stressed that the deal will also benefit the intended readers–the employees, franchise holders, and loyal clients.

“I have full confidence that we will reap the benefits of cost improvement of supplies, greater operational efficiency, reliable and response-on-demand servicing, and well structured and professionally managed organization. This will mean increased revenue flow, better margins and limitless opportunities for you—not to mention better service, better quality and “mas sulit” food selection for our loyal patrons.”

He also assured them that, during the turnover process and beyond, their “voice will be heard every step of the way.”

He said two board seats in the new organization have been reserved for him and Ferdinand Sia, the current chief operations officer. Both will also be part of the management committee “for the coming years.”

Global brand

Sia stressed that the deal with Jollibee will strengthen the brand. As the business is on its way to becoming a “Global Mang Inasal,” Filipinos will be “proud,” he said.

“Mang Inasal will have the professional support and vast resource needed to steer the business to the next level,” Sia wrote. “Knowing that [Jollibee’s] Tony Tan Caktiong share the values and business principles I have, I know that my VISION of better quality lives for the Pinoy Diners and Pinoy Entrepreneur will live.”

Growing the business was part of Sia’s goal when he decided to offer the company to the public early next year. Since 2008, Sia has been ramping up interest in Mang Inasal’s success story in preparation for a planned Initial Public Offering. Fresh funds from the capital raising exercise were supposed to finance further store expansion. The aim was to have 500 outlets by 2012. Before the Jollibee deal, it just opened its 300th outlet at the SM Mall of Asia.

Thus, despite the pain and the deep sadness, Sia said he is “ecstatic and in high spirits” since the future of his “7-year old child…is secured and filled with great optimism.”

More “little Jollibee’s”?

It is likely that keen watchers of entrepreneurship have not had the last of Sia’s genius —or luck.

Aside from Sia’s remaining 30% stake in Mang Inasal, Sia’s Injap Investments also has a stake in Deco’s, another up-and-coming food business that serves “batchoy”, a soup made of meat stock, noodles, and garnished with local herbs and spices.

Batchoy was first started by a young butcher called Deco Guillergan Sr., in 1938 in a carinderia at the La Paz public market in Iloilo City. Sia’s Mang Inasal also first flourished in the same city.

Just like how Jollibee has grown through brand extensions and numerous acquisitions, Sia has forged a partnership with Guillergan’s children. Deco—and its “heavily guarded batchoy secret”—was eventually folded under Sia’s Injap Investments.

Deco stores have been slowly expanding to neighboring provinces in Visayas and Metro Manila. Will it be Sia’s new “little Jollibee”?

Inasal's Ed Sia

Meralco allots P12B for capital projects

THE Manila Electric Co. (Meralco), the country’s largest power distributor, has earmarked at least P12 billion for capital expenditures next year to further improve its power distribution system.

“We’re looking at a capital expenditure budget of around P12 billion to keep on improving our service delivery to customers and that requires improving the robustness of our distribution system to meet the expectation of more sensitive industries to the quality of service,” Oscar Reyes, Meralco senior vice president and chief operating officer, said. 

He said they are looking at annual investments between P11 billion and P12 billion. “In terms of capital expenditures, we’re trying to ensure that what we do creates as much value as we can,” he said. 

Betty Siy-Yap, Meralco chief finance officer, said the company has spent P5.1 billion in the first nine months of the year from P4.9 billion during the same period last year. 

“The increase is largely because of the parent company’s electric capital projects for customer requirements, which include subtransmission line and some distribution line projects,” Siy-Yap said. 

Meralco earlier said an 80-percent growth in its year-to-date core net income of P9.2 billion in the first nine months has pushed them to revise net income projections to P11.5 billion instead of P11 billion by year-end.

“The economy itself seems to be growing decently well. So on that basis and if the continued operating efficiencies and the control of our operational expenses, we are prepared to revise our core guidance net income to P11.5 billion from P11 billion,” Manuel V. Pangilinan, Meralco president and chief executive, said in a press conference on the firm’s 9-month financial performance.

The Meralco head hinted earnings may be even better depending on the energy sales in the last quarter and assuming there are no major disruptions in supply due to calamities or shutdowns of the power generation plants in Luzon. The company post P5.1 billion the same nine-month period last year.

Pangilinan said 2010 will be driven mainly by Meralco’s assessment of energy sales and the number of new customers.

Energy sales in the second half are seen to grow by just single-digit compared with that in the first half that grew by about 12.6 percent.

Meralco said its consolidated reported net income amounted to P8 billion in the first nine month from P5 billion in the same period last year.

It added that consolidated core net income—which excludes one-time, exceptional charges—for the first nine months amounted to P9.2 billion from P5.1 billion during same period last year.

Meralco said the results reflected higher volume of energy sold resulting from the surge in demand due to warmer temperature and higher demand from the commercial and industrial customers reflecting the improvement in the economic activity.

In addition, Meralco noted that the results were boosted by the increase in billed customers as well as the later-than-scheduled implementation of the distribution rate adjustments approved by the Energy Regulatory Commission (ERC).

Meralco also said consolidated revenues, 97 percent of which are electricity sales, increased by 32 percent to P188.9 billion in the nine months from P143.1 billion in the same period last year.

The increase in consolidated electricity revenues was on account of higher generation charges for eight out of the nine months of 2010.

The generation charge began to come down in September 2010 with a P0.68-per kilowatthour (kWh) reduction, following lower prices in the Wholesale Electricity Spot Market and higher dispatch of the independent power producers.

The said reduction was net of an unexpected P1.20/kWh increase in automatic cost adjustments billed by the National Power Corp. in August, which was subsequently lowered by ERC to P0.0538. For the nine months, approximately 35 percent of the total increased in consolidated electricity revenues is accounted for by 11-percent growth in volume of energy sold, while 50 percent is due to higher average pass-through costs.

In nine months, Meralco said the consolidated debt balance amounted to P20.6 billion due to debt payments, loan refinancing and net interest expense for the period declined to P1.1 billion from P1.6 billion for the same period last year.

Reyes said the biggest challenge remains to be sourcing and delivery of adequate affordable power, meeting and beating strict regulatory and customer standards of service quality as well as securing timely rate adjustments and reimbursements of pass-through expenses for purchased power.

“We continue to work constructively with power generators, the system and market operators, the Department of Energy and our regulators to ensure the entire electricity supply chain functions robustly to serve our more than 4.8 million residential, commercial and industrial customers,” Reyes said.