SMC replaces external auditors

Food and beverage giant San Miguel Corp. said yesterday it has replaced its external auditors in line with its policy of rotating auditors.

In its annual stockholders’ meeting Tuesday, San Miguel appointed Laya Mananghaya & Co. as the new external auditors of the company for fiscal year 2006, replacing SGV & Co.

San Miguel, in a statement sent to the Philippine Stock Exchange, said the change in external auditors is also to ensure transparency and utmost impartiality in the ongoing investigation initiated by the company on allegations of overstatement of sales by one of its subsidiaries.

San Miguel said it received an anonymous and undated letter alleging overstated sales in Philippine Beverage Partners Inc.

San Miguel said its audit committee has already initiated an investigation into this case and other matters to be conducted by Price Waterhouse Coopers.

The total sales of Philbey is about 2.1 percent of San Miguel’s groupwide sales of P227 billion. The investigation has prompted San Miguel to defer the proposed $300-$400 million offering of preferred shares by its Cayman Islands-based subsidiary San Miguel Capital Funding Ltd.

The international offering will be callable in five years and at the end of each quarter thereafter. Market sources said the securities have so far attracted more than $750 million worth of orders.

While the issue size had yet to be fixed, the proposed offering will be the first hybrid issue from an Asian company other than financial institutions.

Hybrid bonds are deeply subordinated, very long-dated or perpetual securities that allow borrowers to boost their balance sheet without diluting existing shareholders’ holdings, while paying investors returns that are higher than those on senior bonds.