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Tony Tan Caktiong’s Jollibee Cancels P8 Billion Share Issue, Citing Financial Flexibility

by Nick
Jollibee

Homegrown fast food giant Jollibee Foods Corp. (JFC), founded by billionaire Tony Tan Caktiong, has canceled its planned P8 billion preferred share offering to reassess its capital strategy and maximize shareholder value.

In filings with the Securities and Exchange Commission and the Philippine Stock Exchange, JFC announced it is withdrawing its application to issue up to 8 million preferred shares. These funds were initially intended to refinance its Series A Preferred Shares.

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

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Shin mentioned that JFC will explore other capital-raising opportunities aimed at optimizing shareholder value and the company’s capital structure. The decision is influenced by several factors, including strong profit performance and cash flow from its Philippine operations.

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Additional considerations include JFC’s decision to cut its P23 billion capital expenditure budget for 2024 by at least 20 percent, anticipated rate reductions that would allow for more favorable bank loans, and the positive impact of consolidating Compose Coffee.

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JFC expects these factors to improve its funding flexibility and enhance its leverage position.

In its regulatory filing, JFC stated that it is withdrawing its application to offer up to 8 million preferred shares, initially filed with the Securities and Exchange Commission and the Philippine Stock Exchange last June.

Chief Financial Officer Richard Shin reiterated, “Following careful consideration of all relevant factors, we have decided to withdraw our previously announced public offering of Series C Preferred Shares.”

Shin emphasized that the company “will explore other capital-raising opportunities focused on shareholder value and optimization of our capital structure.”

The proceeds from the fundraising program were supposed to refinance JFC’s Series A Preferred Shares. However, JFC believes that the additional funding from the Series C Preferred Shares public offer is no longer needed due to the strong profit performance and cash flow generation of its Philippine business.

Other factors in JFC’s decision include its plan to reduce its P23 billion CAPEX budget for 2024 by at least 20 percent, expected rate cuts later this year that would allow JFC to obtain more beneficial bank loans at floating interest rates, and the profit-accretive contribution from the consolidation of Compose Coffee.

JFC expects these factors to improve its flexibility in funding and increase its leverage position.

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