San Miguel sues Spanish partner

San Miguel Corp. (SMC) is suing its Spanish joint venture partner, Campofrio Alimentacion S.A., (Campofrio), for reneging on an agreement to buy out SMC’s stake in the joint venture company San Miguel Campocarne Corp. (SMCC) and refusing to pay the purchase price of $6 million.

SMC also asked the court for other items of damages.

In the complaint filed at the Mandaluyong Regional Trial Court, SMC asked the court to compel Campofrio to fulfill its contractual commitment to buy-out SMC’s stake in SMCC at the agreed purchase price of $6 million plus interest and legal fees.SMC and Campofrio, one of the biggest processed meat manufacturers in Europe, are partners in SMCC, each owning 50 percent of the company. Last September, Campofrio offered to sell its 50-percent stake in SMCC for $6 million to SMC. SMC declined and exercised its option in the joint venture agreement by offering its 50-percent stake to Campofrio for the same amount. Under the joint venture agreement, Campofrio is bound to accept the offer and Campofrio did agree to SMC’s offer. However, Campofrio later refused to honor its contractual commitment.

In the complaint, SMC claimed that Campofrio acted in bad faith. SMC said that Campofrio’s commitment to SMCC was merely to "test the waters" at minimum exposure, totally ignoring the fiduciary responsibilities of a corporation doing business in the Philippines. It did not even get a license to do business in the Philippines and refused requests by SMCC for [working capital] advances leaving such responsibility to SMC.

SMC also nominated to the court Jose Daniel Javier, currently SMCC general manager, as receiver, to continue managing operations in light of Campofrio’s unjustified refusal to attend board and stockholders meetings which Campofrio itself requested and which were scheduled on Jan. 29 and March 19, 2001.

Javier said SMCC will continue operations and conduct its business as it used to immediately prior to the suit with existing available resources.