"Today is the deadline for buying the subscription. Now, we are buying to the extent of P2.1 billion. And we are going to source the funds from the CIIF (Coconut Industry Investment Fund) dividends," Yorac told reporters at the PCGG office in Pasig City.
"Why are we not subscribing to the whole stockholdings that we are entitled to? Because the government has no money. Of course, we could source the funds from the loans. But the rates are very prohibitive," she said.
Yorac said if the government sources funds from loans, it would have to pay between 10 and 14 percent plus collateral equivalent to 200 percent of the amount borrowed.
"So we might endanger the principal stockholding itself plus everything else. I think the CIIF group of companies are now in the final stages because they have already manifested the intention to purchase and they are preparing the check. It is done," she said.
Yorac said the amount is about 50 percent of the full participation in the rights offering. The full participation to prevent dilution of its stake in SMC is about P4.5 billion.
Although the PCGG could not confirm it, Yorac reiterated there is a possibility of losing one board seat if they buy shares amounting only to P2.1 billion, or 27 percent of the shares presently sequestered.
She said they could not as yet gauge the reaction of the other buyers. "While at most we said we might lose one seat because of the shortage of money," she said, "we are still not sure (if we will really lose one seat) because there is no final reckoning."
She said the government did not assign the other half to the Social Security System (SSS)and the Government Service Insurance System (GSIS) "because they were not prepared to take the assignment."
She believed that the SSS and GSIS, which each have a seat in the SMC board for combined interests of around 12 percent, had fully subscribed to the rights offer.
Yorac said that though the government has always been in the minority in SMC, this should not deter it from defending the value of the shares.
"Because if the value of the shares goes down, definitely we are going to lose a lot of money," she said.
"Because when you make an assignment, you (the government) endorse the right to buy from them at no cost to you. I don’t think they have enough funds for the purpose. Even SSS was waiting up to the last minute. But we cannot speak for them," she said.
Yorac said as of yesterday, the PCGG received another note from the Development Bank of the Philippines indicating the details of the arrangement they want, such as loans and other fine points.
However, she said, "it was too prohibitive. It will be just like borrowing from any other bank."
Yorac noted that the CIIF is the "conservator" of the SMC shares, using a legal term meaning one who exercises act of ownership to preserve value.
She also said that they have already informed the Sandiganbayan that they would be using the CIIF funds to buy the SMC shares.
The PCGG had sequestered the CIIF shares on the grounds that they were acquired by a levy on the coconut industry instituted during the time of the dictator Ferdinand Marcos in the 1970s to early ’80s.
However, SMC chairman and chief executive officer Eduardo Cojuangco, a close Marcos ally, has been allowed by the courts to use the votes on a 20-percent block of San Miguel that was acquired with the coco levy shares.
It is still unclear if he had subscribed to the rights offer.
The PCGG is still contesting the ownership of the 20-percent share now controlled by Cojuangco.
Yorac said that they hope the case will be decided soon, as they have filed pleadings with the Sandiganbayan this week in order to hasten the process.
She said that as soon as the Supreme Court hands down its ruling, she would urge farmers "to get out of San Miguel."
"I think the farmers want to think of getting out of San Miguel because their money had no business being (there) in the first place," she said, adding it would be advisable to sell in bulk rather than piecemeal.
Finance Secretary Cesar Purisima said previously that the government intended to sell the PCGG-held shares together with those owned by the SSS and GSIS as a block, the proceeds of which would be used to boost agricultural production. — With AFP