BDO to raise $1B core capital through rights offer

BDO Unibank Inc would raise $1 billion addtional capital through a rights offer.

The bank's board has approved the rights offer, according to its statement to the Philippine Stock Exchange.

This new capital is meant to support the Bank's medium-term growth objectives and in anticipation of the more stringent Basel III capital guidelines of the Bangko Sentral ng Pilipinas. It will also provide a sufficient buffer on top of the new minimum capital levels and allow BDO to sustain its growth momentum.

The bank said the BSP is proposing to raise capital adequacy ratio of 12.5 percent from 10 percent and to double the Tier1 ratio to 10 percent from 5 percent effective January 2014. BDO said its consolidated CAR and Tier 1 ratios are 15.6 percent and 10.2 percent, respectively.

The rights offer, which is expected to be 1:3, will have an indicative discount of 20 percent to 25 percent to market to "allow shareholders to proportionally participate in the capital-raising program." SM Investments Corp., the International Finance Corp. and United Overseas Bank - the bank's strategic investors have expressed their support for the Bank's expansion plans and the proposed rights offer.

SM Investments has also committed to subscribe to its proportionate share and is willing to underwrite the shares not taken up by the minority shareholders.

Firm details on the proposed pricing, rights ratio and timetable will be disclosed once these are finalized, the bank said.