MANILA, Philippines - Former Finance Secretary Margarito Teves, the man who helped pave the way for the sale of the government’s stake in San Miguel Corp. (SMC) despite opposition from coconut farmers, is thankful that the country’s diversifying conglomerate finally agreed to pay for the government’s 24 percent contested bloc.
He said the coconut industry could now use the proceeds of the share sale to help the ailing sector.
“I’m very glad to learn that SMC bought the government’s 24 percent stake in SMC for P57.6 billion. The government can now use the proceeds to fund the various programs of the coconut industry, provide livelihood projects and help increase the incomes of coconut farmers,” Teves, who was appointed independent director of the SMC’s board of directors in June 2012, told The STAR yesterday.
In 2009, when Teves was finance chief, the Macapagal-Arroyo government, through the Office of the Solicitor General, asked the Supreme Court to allow it to convert its 24 percent stake in SMC into preferred shares. In its motion, the government assured that the share swap would not change the condition of the assets.
Preferred shares have higher dividend yield but holders do not have voting rights. Preferred shares may be redeemed in whole or in part regardless of the existence of unrestricted retained earnings.
The Supreme Court approved the conversion in 2009 despite petitions from various groups led by former senator and Presidential Commission on Good Government (PCGG) chairman Jovito Salonga.
In a petition filed in September 2009, Salonga dubbed the government’s plan as “indefensible and shameless sellout” of the sequestered SMC shares.
He and fellow petitioners said converting the SMC shares would give its chairman Eduardo Cojuangco and president Ramon Ang an opportunity to oust the government nominees the SMC board.
“The conversion of the shares and the lifting of sequestration over them take away these protections and make them vulnerable to corporate chicanery. These are condition-altering proposals that no reasonable sequestrator would ever do, as they loosen the sequestrator’s grip on the property, at a time when the government has already won the trial and has the privilege of waiting,” they said.
But Teves, as finance chief at the time, said the preferred shares earned higher yearly dividends.
Teves said that with the sale of the government’s stake, the proceeds could be used to fund various programs of the coconut industry, provide livelihood projects and help increase the income of coconut farmers.
He urged the managers of the Coconut Industry Investment Fund (CIIF) to manage the proceeds well.
“The challenge to the managers of the CIIF Fund is to ensure that the proceeds would really redound to the benefit of the coconut industry and farmers. There should be continuous monitoring and periodic reports by the CIIF and representatives of the government on the use of the proceeds,” said Teves who is running for Negros Oriental governor in the 2013 elections.
Last week, SMC announced that it paid P57.6 billion in proceeds from the redemption of its Series 1 preferred shares. The amount is expected to help fund programs benefiting the local coconut industry and its farmers.