SMC’s top shareholder moves closer to listing

MANILA, Philippines - The single largest shareholder in diversified conglomerate San Miguel Corp. (SMC) has taken another step closer to listing in the local bourse.

Top Frontier Investment Holdings Inc. will gain access to the capital markets as a listed firm while ending a cross ownership structure with the conglomerate.

In a public notice, Top Frontier said it filed with the Securities and Exchange Commission a sworn registration statement on Oct. 24.

Top Frontier is seeking the corporate regulators approval for the registration of 490.2 million shares at a par value of P1.

The shares will be listed by way of introduction in the main board of the Philippine Stock Exchange (PSE) at P178 each, Top Frontier said.

Listing by way of introduction allows a firm to trade at the PSE without first having to sell shares to the public.

Last month, the Top Frontier board “approved the filing of an application with the PSE for the listing by way of introduction of all the common shares of Top Frontier.”

Top Frontier, backed by former Trade Minister Roberto V. Ongpin, businessman Iñigo U. Zobel, condiments king Jose Y. Campos and SMC chief operating officer Ramon S. Ang, is the single biggest shareholder of SMC.

SMC, for its part, said its board of directors approved the “declaration, by way of property dividends, of 240.19 million common shares of stock of Top Frontier Investment Holdings Inc. owned and held by the corporation.”

Specifically, the investing public will get one common share in Top Frontier for every 10 common shares of SMC that they own. Record date is Nov. 5 while payment date has yet to be determined.

SMC owns 49 percent of Top Frontier which, in turn, owns 66.1 percent of the conglomerate. The cross ownership structure allows both parties to block any takeover or entry of hostile entities given each other’s rights to match any offer from potential investors.

Aside from SMC, Top Frontier also owns 100 percent of Clariden Holdings Inc., which holds the mining rights for the Nonoc nickel project in Surigao del Norte, Mt. Cadig nickel project and Lo-oc limestone project.

It also owns exploration permits for certain areas under the Bango gold project. A subsidiary of Clariden was also chosen as the contractor under a joint operating agreement to be executed for the North Davao project.

SMC started selling parts of key businesses in 2007 to fund diversification from the mature food and beverage businesses into high-growth and capital-intensive sectors like power generation, mining, infrastructure and telecommunications.

From its core brewery and food business, SMC has expanded into power production (SMC Global Power Corp.), downstream oil sector (Petron Corp.), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport, Skyway and the NAIA Expressway. So far, around 70 percent of the company’s revenues are already coming from new businesses.

In the first half, foreign exchange losses dragged the diversified conglomerate into the red. Including unrealized forex losses, its net loss hit P2.4 billion, reversing the P14.12-billion income in the same period last year.

But SMC’s revenues reached P357.5 billion, up nine percent from last year due to strong performances from food subsidiary Pure Foods and Petron Malaysia, which was consolidated into the SMC Group in April 2012.