Coco farmers urge government to pursue share swap of SMC stake

MANILA, Philippines - An umbrella group representing more than a million coconut farmers has urged the government to pursue the timely conversion of its sequestered San Miguel Corp. (SMC) common shares into preferred shares that will provide earnings of approximately P4.5 billion yearly to the country’s ailing coconut industry.

“This issue has been dragging on for so long that we would like the coconut farmers and the industry in general to be given greater benefits starting now,” Efren Villasenor , president of the Pambansang Koalisyon ng Samahang Magsasaka at Manggagawa sa Niogan (PKSMMN), said in the vernacular.”The coconut farmers have been deprived from receiving the economic benefits of the sequestered shares. This is why we are supporting and urging the government to pursue the conversion of the farmers’ stake in San Miguel into high-yielding preferred shares.”

At the same time, Villaseñor slammed a group of alleged farmers and NGOs for their myopic view of government’s critical intervention to save the coconut industry and help farmers overcome the financial crisis through the conversion plan.

He took offense that these same groups have been misrepresenting themselves as champion of the coconut farmers’ welfare.

“We are not learned lawyers, but we know that this development is for the good of the farmers and the coconut industry as a whole,” Villasenor said, adding “ We are miffed that these groups are serving their personal and political interests at the expense of the coconut farmers.”

He debunked claims of the group of former Senator Jovito Salonga that the conversion of the sequestered common shares, held in trust by the Philippine government in behalf of the coconut farmers, to preferred shares will dilute their value.

SMC recently announced an offer to swap common shares to preferred to allow stockholders who are skeptical of the company’s diversification into new businesses to reduce exposure to risk by holding high-yielding debt-like shares rather than just pure equity. The conversion option has been approved by and offered to all its shareholders.

The preferred shares are assured bigger income based on fixed rate of cash dividends as opposed to the occasional cash dividends ascribed to common shares. The dividend on the preferred shares at eight percent per annum is P6 per share, more than 4x that of the dividend on the common shares of P1.40/share.

Villasenor also said that his group understood that the CIIF companies will continue to be the owners of the converted SMC shares and that the perceived benefits to the same should not only be in the context of the voting rights connected to the common shares.

“What dilution of the CIIF shares in the SMC are they talking about? The CIIF will continue to own 24 percent of the company, but this time with a substantial increase in the value of the shares and higher dividends for the benefit of the farmers and the industry. I cannot understand the logic behind the other groups’ opposition,” Villasenor lamented.