SMC’s biggest stockholder going into coal

LONDON – The single largest shareholder in diversified conglomerate San Miguel Corp. (SMC) is venturing into coal projects in the Philippines.

Top Frontier Investment Holdings Inc. wants to take advantage of low valuation on coal projects to expand its existing portfolio of nickel, gold and copper projects, its top executive said.

“I think Top Frontier has quite a good investment at the moment and of course, it can invest more on coal projects,” said Top Frontier president and CEO Ramon S. Ang.

Ang said Top Frontier can benefit from soft coal prices that result in low valuation of coal projects. Global coal prices have dropped significantly due to oversupply, making it one of the worst-performing bulk commodities this year.

“So, I think there’s an opportunity for us to invest in that business,” he stressed.

Top Frontier is backed by former Trade Minister Roberto V. Ongpin, businessman Iñigo U. Zobel, condiments king Jose Y. Campos and Ang, who is also SMC president and chief operating officer.

Top Frontier, through fully-owned subsidiary Clariden Holdings Inc., 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 Holdings was also chosen as the contractor under a joint operating agreement to be executed for the North Davao project.

In 2012, Clariden Holdings posted P2.66 billion in revenues and P2.5 billion in operating income. However, it recorded a net loss of P12.43 billion.

Top Frontier is joining the Philippine Stock Exchange (PSE) by way of introduction, allowing the company to list in the local bourse without having to sell shares to the public immediately.

“We only did that to finally, once and for all, take out the cross holding, which a lot of investors are requesting,” Ang said.

SMC owns 49 percent of Top Frontier which, in turn, owns majority of the diversified 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.

Top Frontier is the legal and beneficial owner of 1.573 billion common shares in SMC, or approximately 66.1 percent of the outstanding common stock of SMC.

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