MANILA, Philippines - As the deadline for the share-swap offer draws near, more and more shareholders of San Miguel Corp. are exchanging their common shares to preferred shares.
In a statement issued over the weekend, San Miguel said it received word from Citibank and ATR KimEng Capital Partners Inc. – the joint lead arrangers of its swap offer, that many shareholders are availing of the proposal.
“As the deadline nears for the San Miguel share-swap option, I was informed of this positive development, that the conversion plan has been received positively, with more and more shareholders opting to convert their shares,” said Ramon S. Ang, president and chief operating officer of SMC.
The principal reasons given for availing of the exchange offer were the higher face value of the preferred shares of P75 per share versus the market price of the common shares of P51 per share when the exchange was first announced, and the higher dividend rate of eight percent per annum, which translates to P6 per share per annum versus the common dividend of P1.40 per share given in the past many years.
Another reason cited was the concerns raised by shareholders over the San Miguel’s diversification tack which saw them acquire a stake in power utility giant Manila Electric Co., an option to buy a majority interest in oil refiner Petron Corp., as well as invest in a toll road business.
The swap offer had been extended Aug. 20 to Sept. 21 this year to allow more shareholders to participate in this exercise.
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.
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.