In a stock exchange filing on Friday, the fast food giant said it will redeem all three million Series A preferred shares on Oct. 14, 2024 at the offer price plus any accrued and unpaid cash dividends.
This is a capital management strategy to avoid paying higher rates that will be triggered by a step-up feature after the share's third anniversary.
Checks for the redemption price will be available for release starting Oct. 15 through Stock Transfer Service Inc.
The step-up feature ensures that if interest rates in the market rise, the dividend rate for the Series A shares will also increase. A common strategy for companies is to redeem the shares before the step-up takes place, allowing them to avoid the financial burden of paying higher rates.
JFC was paying a dividend rate of 3.2821 percent on its Series A preferred shares.
Robust financial performance in 2024
JFC recently reported systemwide sales of P182.6 billion for the first half of the year, up 11.3 percent, while net income jumped nearly 29 percent to P5.66 billion.
In the second quarter alone, sales climbed 12.1 percent to P95.8 billion, fueled by strong results from brands like Jollibee, Chowking, and Mang Inasal. Net income for the quarter hit a record P3.2 billion, a 27.3-percent increase.
Cancelled equity fundraising
Last July, the company scuttled plans to raise up to P8 billion from a new issuance of preferred shares.
The added funds were no longer necessary due to the company’s strong profits and cash flow, on top of anticipated rate cuts later this year, said Richard Shin, JFC group chief financial and risk officer.
Other factors that went into the decision were the 20-percent reduction in capital spending this year and the consolidation of South Korea’s Compose Coffee, which is expected to further bolster cash generation.
