SAMI
📉 San Miguel’s corporate bonds (ONs) initially plummeted about 30% due to market contagion fears following defaults by other companies.
💡 The company strategically bought back its own discounted bonds, effectively reducing its debt repayment burden by 30% on those repurchased ONs.
🛡️ Despite a high debt-to-EBITDA ratio (24x), San Miguel demonstrated financial astuteness and sustainability in a challenging environment, unlike other distressed companies.
@ClaveBursatilTV:
“But let’s look at a case with a happy ending, and we’re talking about San Miguel, which is another company with a large debt ratio, meaning high debt compared to the money it invoices. This isn’t necessarily a problem if it’s well-managed financially and if there’s a financial plan behind it. Unlike the other companies we saw that had high debt, San Miguel has high debt, but look what happened. This week, there was a contagion. The market said, ‘Well, which is the next one to fall? It’s Sami, it’s San Miguel.’ The corporate bonds got hammered, falling about 30% in the market, and suddenly they soared and returned to the previous price. What happened? What happened? Well, look, the company came out to explain that they themselves went and bought their ONs. And why? Because they are good, because they want them to go up? No, simply because they have to pay these ONs soon, and if they fall 30%, it’s better for them; they go and repurchase them, paying 30% less. So, instead of paying 100% of the ON at maturity, they bought back their own ONs that had fallen due to contagion from other companies where the market thought Sami would fail. They went and got themselves a 30% discount on their own ONs that mature soon. So we can see in this example that having a high debt ratio, I mean, Sami has a net debt to EBITDA ratio of 24 times; it owes 24 times in net of the EBITDA the company has today, but it manages financially to remain sustainable in that challenging context. So, there’s a bit of everything in our market.”
Watch the exact part of the video where Nico from @ClaveBursatilTV talks about San Miguel S.A. here:
Watch the video on YouTube
Read more articles by the world’s top analysts on San Miguel S.A. (SAMI) at the following link. SAMI stock.
