SMC stockholders okay preferred shares issuance

MANILA, Philippines - Shareholders of San Miguel Corp. have unanimously approved a proposal to issue preferred shares in exchange for common stocks held by shareholders.

The offering involves up to 1.1 billion common shares which will be exchanged at a ratio of one preferred share for every one share.

The preferred shares, priced at P75 per share or a 22 percent premium over its common shares, can accumulate dividends and will be listed on the Philippine Stock Exchange.

The preferred shares will have a dividend rate of eight percent per annum.

The offering will run from July 27 to Aug. 20 this year but San Miguel has the option to extend the offer period.

The share swap is intended to address concerns about the new thrusts of San Miguel, which has recently diversified into capital intensive businesses like oil (Petron Corp.), power distribution (Manila Electric Co.), and telecommunications (Liberty Telecommunications Holdings Inc.).

San Miguel bought a 27 percent stake in power retailer Manila Electric Co. last year and has an option to buy a majority interest in oil refiner Petron Corp.

San Miguel’s financial advisors said the exchange offer is a proactive approach by the company to engage with existing shareholders who may seek to assume a different risk profile in light of the current global financial crisis and the investments of the company in Meralco and Petron.

Unlike common stocks, preferred shares have a higher claim on the assets and earnings of the company. However, these share do not have voting rights. 

San Miguel has the option to redeem the preferred shares on the third year of the issue.