SSS cashes in P17B from sale of BDO shares

The Social Security System (SSS) has sold its shares in Banco de Oro (BDO), the country’s second largest bank, for P17.3 billion and realized a P9.11 billion income after the Supreme Court dismissed with finality a petition blocking the deal, a top official said.

SSS president and chief executive officer Corazon de la Paz-Bernardo said the sale of 338 million shares to SM Investments Corp. (SMIC), BDO’s parent firm, would be paid in four installments, with the final payment of P12.11 billion to be made this October.

“The sale of our BDO stocks further strengthens the fund’s financial viability,” she said. “It bolsters SSS’ investment income, which has already posted a strong showing last year.”

The deal resulted from a tender offer SMIC made to Equitable-PCIBank (EPCIB) shareholders to buy their stocks at P92 per share in 2006. Among those which accepted the offer was the Government Service Insurance System, which earned P9 billion for its 12-percent equity stake.

BDO and EPCIB eventually merged in May 2007, with 1.8 BDO stocks replacing each EPCIB share. SMIC has made initial payments of P3.4 billion for the SSS BDO shares.

SSS never sold any EPCIB shares at a loss as claimed by some quarters, De la Paz-Bernardo said.

“Because of the merger, our 187 million EPCIB stocks became 338 million BDO shares, which we sold at P51.11 per share,” De la Paz-Bernardo said. “The P17 billion we gained from this sale is equal to what we would have earned by selling our EPCIB stocks at P92 per share.”

The Supreme Court dismissed last September the case filed in 2004 by several petitioners, including Senators Sergio Osmeña III and Jamby Madrigal, who sought to stop SSS from selling its EPCIB stocks to BDO Capital.

The court said the case became “moot and academic” after the BDO-EPCIB merger, and it denied with finality Osmeña and Madrigal’s motion for reconsideration last November.

SSS’ income from investments, government securities and equities reached P19.6 billion from January to September last year, which was 110 percent more than the same period in 2006.