Pure Foods okays public offer of 25-M preferred shares

MANILA, Philippines - San Miguel Pure Foods Co. Inc. (SMPF) has approved the public offering of up to 25 million new preferred shares as part of a program to raise a total of P50 billion.

SMPF vice chairman Ramon S. Ang earlier said the company was looking to raise P50 billion by selling a mix of preferred shares and debt paper next year to fund its expansion program and new businesses to include power generation, water and infrastructure.

In a disclosure to the Philippine Stock Exchange yesterday, SMPF said the terms of the preferred share offering such as issue price, dividend rate and payment shall be subject to approval by the Securities and Exchange Commission of the reclassification of the company’s common shares to preferred shares.

The food processing company reclassified 40 million common shares into non-voting, cumulative and non-participating preferred shares.

SMPF’s planned preferred share issuance followed failed negotiations between San Miguel and two prospective buyers – the consortium of the Campos family and private tuna canner Century Pacific Group, and Universal Robina Corp. of the Gokongwei family.

San Miguel rejected their offers since they wanted to acquire 100 percent of SMPF. The conglomerate was only willing to divest up to a 49 percent stake in the food processing firm.

San Miguel owns 99.92 percent of SMPF, which owns the Purefoods, Magnolia, Monterey Star, San Mig Coffee and B-Meg brands.

As of end-March this year, SMPF had P121.07 billion in cash and near-cash assets as against P209.4 billion in the same period a year ago.

San Miguel is also planning a P75-billion fund raising program to fund acquisitions as it seeks stronger avenues to fuel growth. It has raised around $3 billion from asset sales in the past three years.

The conglomerate is hard pressed to raise funds to cover the purchase substantial stakes in several companies including power distributor Manila Electric Co., oil refiner Petron Corp., Bank of Commerce, Caticlan International Airport and Development Corp., several power plants, toll-road operations and coal mines.

For Petron alone, San Miguel would need to shell out around P19 billion before the year ends if it decides to exercise an option to buy the remaining stake in SEA Refinery Corp., which holds 50.1 percent of Petron.

Between 2009 and 2011, San Miguel will also have to pay P27 billion to the Government Service Insurance System for the state pension fund’s 27-percent stake in Meralco.