Court junks GSIS petition to stop SMC stockholders meeting

It is all systems go for the scheduled annual stockholders meeting of San Miguel Corp. (SMC) tomorrow as the Mandaluyong Regional Trial Court (RTC) junked the petition for postponement by state pension fund Government Service Insurance System (GSIS).

In a five-page decision released last Monday, the Mandaluyong RTC also denied the GSIS’s request for a preliminary mandatory and/or prohibitory injunction to compel the food and beverage conglomerate into reopening the nomination for the company’s board of directors.

Just recently, the GSIS waged a proxy battle among SMC stockholders to muster enough votes necessary for the government bloc to wrest control of the company from current chairman and CEO Eduardo Cojuangco Jr., a known ally of deposed President Joseph Estrada.

Through newspaper advertisements, GSIS urged SMC’s minority stockholders to assign their voting rights to the pension fund which, in turn, could give it an additional seat in the company’s 12-man board.

The Arroyo administration has nominated five directors to replace the Cojuangco allies representing the 27-percent shares from the coconut levy fund sequestered by the President Commission on Good Government (PCGG). Adding another seat held by the Social Security System, the government hopes to gain eight seats from the board to make it a majority-controlled company.

But the court quashed the GSIS’s petition, noting that while the fund as a stockholder has an inherent right to nominate its candidates to the SMC board and to vote the shares it holds, these rights must be exercised in accordance with the provisions of the company’s by-laws.

Under SMC’s by-laws, the deadline for the nomination of directors was last Jan. 20, 2001. The Arroyo government did not make the deadline since it was the height of the People Power revolt in EDSA. In fact, that was the time when then President Estrada left Malacañang and President Arroyo was subsequently sworn into office.

The Mandaluyong RTC also noted that while the fixed deadline may be reset at an earlier or later date, this authority rests exclusively on the company’s board and is not for the courts to decide.

As this developed, sources pointed out SMC could be headed for another banner year, continuing its third consecutive year on the robust growth track, as its first quarter figures indicate sales and income hitting gains of 20 percent and 30 percent, respectively.

Estimates for the first three months of 2001 showed SMC revenues exceeding P24 billion, with strong results turned in by the food and packaging businesses, along with the juice (Sugarland) and premium beer (J. Boag & Son) segments in the beverage sector.

The sources said that despite increases in costs of raw materials, particularly for its packaging and beverage lines, SMC is expected to register over 30 percent increase in operating income.

Earlier, Cojuangco projected a consistent 20-percent growth in the conglomerate’s revenues over the next two years, breaching the P100-billion sales mark with him at the helm.

He added SMC will remain aggressive in taking opportunities. "We will look at companies that have synergies with food, softdrinks, liquor, beer and whatever we have right now which would strengthen our position and consolidate things for us," he said.

Last year, SMC acquired Australian premium beer brewer J. Boag & Son as well as juice maker Sugarland Beverage Corp. This year, the food and beverage conglomerate regained control of leading softdrink company Coca-Cola Bottlers Philippines Inc. and acquired competitor Pure Foods Corp. from the Ayala group.

In 2000, SMC posted profits on a recurring basis of P7.5 billion, a substantial 25 percent improvement from P6.016 billion in 1999. Consolidated sales reached P88.705 billion, up 17 percent from P75.619 billion a year earlier.