San Miguel extends share swap offer period

MANILA, Philippines - San Miguel Corp. has extended by a month the offer period for shareholders to exchange their common shares into preferred shares.

In a disclosure to the Philippine Stock Exchange, San Miguel said the conversion period has been extended from Aug. 20 to Sept. 21, 2009, “to allow more shareholders of the company to participate in the exchange offer.”

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

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

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

The share swap option 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 Meralco last year and has an option to buy a majority interest in Petron.

San Miguel’s financial advisors said the exchange offer is a proactive approach 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 shares do not have voting rights. 

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