Changes in SMC capital structure OK'd

MANILA, Philippines - The Securities and Exchange Commission has approved the amendments to San Miguel Corp.’s capital structure.

Under its approved amended articles of incorporation, San Miguel’s authorized capital stock of P22.5 billion will now consist of 3.39 billion common shares and 1.1 billion preferred shares, all with par value of P5.

The common shares comprise 60 percent of the capital stock, equivalent to 2.03 billion shares, and may be owned only by Filipinos while the preferred shares or Class B shares account for 40 percent of the conglomerate’s capital stock, which may be owned by both local and foreign investors.

Holders of preferred shares will be entitled to receive cash dividends upon declaration made at the sole option of the board of directors. The dividends will be payed quarterly, beginning on the third month after issue date of preferred shares.

The preferred shares are redeemable in whole or in part at the sole option of the corporation at the end of three years from issue date or on any dividend payment at the price equal to the issue price plus any accumulated and unpaid cash dividends.

San Miguel recently extended by a month the offer period for shareholders to exchange their common shares into preferred shares from Aug. 20 to Sept. 21, 2009. 

The extension was intended 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 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 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.).

Unlike common stocks, preferred shares have a higher claim on the assets and earnings of the company. However, they don’t have voting rights. 

San Miguel has the option to redeem the preferred shares on the third year of the issue. – Zinnia dela Peña