Roxas nixes revaluation of deal between SMC, Kirin

Trade and Industry Secretary Manuel Roxas II has thumbed down a proposal to revaluate Kirin Brewery’s investment in San Miguel Corp. (SMC), saying it is too late to change the terms of the transaction.

Reacting to reports that the Presidential Commission on Good Government (PCGG) is calling for a revaluation of the $450-million deal, Roxas said it would not be good for the government to twiddle with the valuation at this stage.

Roxas was appointed by the president late last year to head the government committee that would study the Kirin-SMC deal and determine whether it would benefit the interest of the government which still controls a substantial interest in the conglomerate.

According to Roxas, the government committee appointed to review the deal remains on track and the "outstanding elements" are slowly being resolved.

"There are two or three terms remaining that have to be resolved but they are in the nature of language and how the agreement was worded," Roxas explained. "But my position is there should no longer be a revaluation," he added.

Roxas explained that if government would insist on revaluation after every transaction involving its assets, there would be no end to any deal it would enter into which would further discourage investments and erode confidence on official decisions.

According to Roxas, the increase in the price of SMC shares in the stock market could not be taken as a justification for the proposed revaluation regardless of how fast SMC shares are moving.

"It could be argued with equal weight that the reason for the movement was the Kirin deal itself," he pointed out. "Alangan namang lahat na lang ng transaction ay kailangang ma-revaluate after the fact."

The PCGG, however, is still set to review the transaction, saying that it would study its "judicial and intra-corporate" options and question the terms that the commission said gave SMC chairman Eduardo Cojuangco undue benefits as SMC stockholder.

The PCGG expressed particular concern on a provision in the SMC-Kirin agreement that "appears to bind Kirin to vote exclusively with Cojuangco as a stockholder for the next five years."

"We will study whether this constitutes prohibited self-dealing and consider all our options between now and the scheduled Feb. 27, 2002 SMC special stockholders meeting," the PCGG said in a statement.

For his part, Cojuangco clarified that the stockholders’ agreement in the deal, pertaining to a voting trust arrangement between San Miguel and Kirin, would not bind Kirin to his vote on all issues affecting San Miguel.

"The shareholders’ agreement, it is not saying that I will vote for Kirin. What it says is, if there are any big issues that will be put before the San Miguel board, we need to have an agreement (between the two of us) before we vote," Cojuangco said.