SMC in share placement deal for 10.1% stake in Aussie firm

MANILA, Philippines - San Miguel Corp. (SMC), the biggest food and beverage conglomerate in Southeast Asia, is stepping up its diversification into high-growth industries as it entered into a $40-million share placement deal with Australian mining firm Indophil Resources.

In separate statements yesterday, the two companies said a share placement agreement will involve SMC’s subscription to 48 million new Indophil shares equivalent to a 10.1-percent stake in the mining company.

Indophil, listed in the Australian Stock Exchange, is engaged in the exploration and development of mineral resources in Southeast Asia, specifically the Philippines. It holds a 37.5-percent beneficial ownership of Sagittarius Mines Inc.

SMC corporate information officer Ferdinand Constantino said with the agreement, SMC will start off its legal and financial due diligence on an exclusive basis.

Indophil, meanwhile, told the Australian bourse that the completion of the share issue and receipt is scheduled on Oct. 15, 2010. No shareholder approval for the placement is required, the company added.

“Engaging the support of San Miguel – a diversified, global corporation based in the Philippines – is a strategically important and positive outcome for the continued successful development of its mining interests. San Miguel brings significant financial strength and regional relationships, underpinned by 120 years of operational experience in the Philippines,” Indophil CEO Richard Laufmann said.

Based on the exclusivity arrangement, SMC will be given until Jan. 10, 2011 to complete its due diligence on Indophil and decide whether to submit a control proposal to Indophil.

But Indophil said this does not represent a statement of intention on the part of SMC to put forward a control proposal as these discussions are preliminary and non-binding.

“There is no assurance that such a proposal will be submitted, nor is there any assurance as to the price which may be offered if a proposal is put forward,” it said.

Indophil is immediately ceasing discussions with other interested parties in respect of possible corporate actions involving Indophil and it will remove access rights of those other parties to the Indophil data room.

For the transaction, Indophil is being advised by Gresham Advisory Partners Ltd., Baker & McKenzie and Freehills while SMC is being advised by Bank of America, Merill Lynch and Blake Dawson.