San Miguel mulls up to 1-billion share issue

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. plans to issue up to one billion common shares in the first quarter next year to boost its public float and bankroll new acquisitions and diversification into heavy industries.

In a briefing following the listing of San Miguel’s P65.5 billion worth of preferred shares on the stock exchange yesterday, company president and chief operating officer Ramon S. Ang said the group may issue the shares in tranches through a secondary offering.

He said the terms are still being worked out and that the company would make the necessary announcement as soon as everything has been firmed up.

Ang said the common shares to be sold would come from the company’s existing holdings, as well as from its other major stockholders.

At the same time, Ang disclosed that San Miguel is in the final stage of negotiations with a foreign company, which has an enterprise value of $2 billion, and expects to conclude an agreement in the next 30 days.

Documents submitted to the exchange showed that 89.5 percent of San Miguel’s outstanding capital stock is held by Top Frontier Investments Holdings, majority owned by the group of former Trade Minister Roberto V. Ongpin, condiments king Joselito Campos and businessman Iñigo Zobel.

San Miguel is the single biggest shareholder of Top Frontier with its 49-percent stake.

The share price of San Miguel has been on an upward trend, hitting record highs in the past two months. From only P74.50 on Oct. 22, the stock has surged 73 percent to close at P129 yesterday as investors gobbled up the shares in anticipation of a share sale that is touted to become the biggest in corporate history.

Ang said the share sale is also part of the food, beverage and packaging conglomerate’s effort to comply with the bourse’s minimum public float. With only eight percent of its shares currently held by the public, San Miguel was stricken off the Philippine Stock Exchange’s 30-company main index.

Ang said the listing of 873.17 million Series “1” preferred shares would “provide liquidity for our share owners, allowing them to trade their shares in the market, creating more value for them and at the same time, providing more investors the opportunity to participate in San Miguel’s growth.”

The group is planning to participate in all the projects that the government would offer under the Public-Private Partnership (PPP) program for infrastructure as it sees enormous opportunities in this sector to cut its reliance on food and beer.

Among these PPP projects, San Miguel is was most interested in the construction of the 100-kilometer Batangas-Manila (Batman 1) natural gas pipeline project.

Batman 1 is targeted to be built next year in time for the planned construction of several liquefied natural gas (LNG) projects in Luzon.

San Miguel Energy Corp. (SMEC), the group’s vehicle for its energy ventures, is currently one of the biggest players in the power industry, having the largest power capacity portfolio of 28.1 percent of the Luzon grid and 21.4 percent of the national grid, according to the Energy Department.

Other PPP projects include the Metro Rail Transit (MRT)-Light Rail Transit expansion (P70 billion); MRT Line 2 extension (P11.29 billion); the new Bohol Airport (P7.54 billion); Puerto Princesa Airport (P4.36 billion); North Luzon Expressway-South Luzon Expressway link (P21 billion); Cavite-Laguna Expressway-Manila side section (P10.5 billion); Daraga International Airport (P3.07 billion) and the City Terminal for the Diosdado Macapagal International Airport in Clark.