Sale of Cocofed-held San Miguel shares pushed

MANILA, Philippines - The Office of the Solicitor General (OSG) is pushing for the immediate disposal of the 24-percent stake of Philippine Coconut Producers Federation Inc. (Cocofed) in San Miguel Corp. (SMC) that was seized in favor of the government.

In a six-page comment submitted to the Supreme Court yesterday, Solicitor General Agnes Devanadera said there is a need for the government to sell the sequestered SMC shares in the names of 14 holding companies of the Coconut Industry Investment Fund (CIIF) as soon as possible as these have been affected by the global financial crisis.

The OSG said the government is particularly concerned about the possible losses it would incur from the continued depreciation of the market value of the shares.

Devanadera said this repercussion of the financial crisis on government’s shares in SMC was best demonstrated by the withdrawal made by Top Frontier Investment Holdings Inc. of its offer to purchase the shares for P56.5 billion.

But the firm was compelled to withdraw its offer to purchase due to the recession and economic slowdown and the extreme difficulty to raise the substantial funds needed to purchase the subject SMC shares.

“It is undisputed that there has been a substantial depreciation in the stock market prices of said shares and one way by which the value of said shares may be preserved is their immediate sale at a premium price and the proceeds of which shall be deposited in an escrow account,” the OSG argued.

The comment was submitted by the OSG to the SC after Cocofed filed a manifestation informing the High Court that there are other parties who have expressed interest in acquiring its shares in SMC.

Devanadera said the government is mandated to utilize the coconut funds for the interest of the coconut farmers and industry.

“Despite Top Frontier Investment Holdings Inc.’s withdrawal of the offer to purchase the CIIF SMC shares, respondent [Republic of the Philippines] explores the feasibility of selling the subject CIIF SMC shares under terms and conditions most advantageous to the government,” Devanadera said.

Earlier, former senators Jovito Salonga and Wigberto Tanada have asked the SC to compel officials of SMC to explain whether the reported reduction of P54 billion coconut levy funds was due to the company’s series of business ventures.

In an eight-page motion, Salonga and Tanada of the so-called Multi-Sectoral Task Force on the Coco Levy Recovery, said SMC should explain the funding sources and other commitments made involving its new acquisitions such as the Meralco and Petron shares,

the reported venture into water via the Laiban Dam project as well as into telecommunications via Qatar Telecom and even in mining.

Salonga insisted that the coconut farmers need to be apprised of how their claims for the coco levy funds would be affected by SMC’s business forays.

He also asked the SC to turn down Cocofed’s motion of Cocofed seeking the approval of the proposed sale of the subject SMC shares.

Salonga questioned Cocofed’s authority to represent the coconut farmers since its leaders have also been impleaded in numerous coconut levy-related cases as among the culprits in “robbing” the farmers of their legitimate share in the taxes they paid.

The former senator stressed that even the Philippine Coconut Authority (PCA) has not accredited Cocofed as the legitimate national organization of coconut farmers.

Plans to sell the government shares in SMC has hit a snag with the buyer that the Philippine Coconut Producers Federation Inc.

(Cocofed) has been trumpeting since last year backed out due to economic reasons.

In a manifestation filed before the SC, the group of coconut farmers said the prospective buyer of the 24 percent government stake in the food and beverage giant, Top Frontier Investments Holdings, Inc., has withdrawn their offer.

In a letter sent to Cocofed on Jan. 27, Top Frontier said “adverse developments have transpired which effectively prevent us from proceeding with the transaction.”

The firm, which offered to buy the shares for P56.5 billion, said the global stock market has plummeted sharply, affecting the liquidity of major lenders.

Records from the Securities and Exchange Commission show that Top Frontier’s incorporators include Iñigo U. Zobel, Bryan U. Villanueva, Joselito D. Campos, Jr., Consuelo Eden P. Lagao, and Rhogel S. Gandingco. It has an authorized capital stock of P1 billion at P100 per value per share.

Despite this recent development, Cocofed claimed that there are other parties interested in purchasing the bloc.

The government seized the stake in 1986 on suspicion that the shares were acquired by President Marcos using an illegal levy collected from coconut farmers.

The Sandiganbayan later ruled that the stake belongs to the state.

Cocofed is actually now battling for the shares before the SC. To end the protracted battle, the government has decided to enter into a settlement agreement with the group.

Cocofed has proposed to dispose the stake through a cross sale at the stock exchange and for cash, to be turned over to either the Development Bank of the Philippines or the Land Bank of the Philippines, or both state banks.

Earnings are to be split among a coconut industry trust fund, the government coconut agency and Cocofed.