Purefoods to boost public float this year

MANILA, Philippines - The food unit of diversified conglomerate San Miguel Corp. (SMC) will comply with the local bourse’s public float requirements within the year, its top executive said.

San Miguel Pure Foods Co. Inc. is looking at raising its public ownership level to as much as 15 percent through a block sale to an investor group.

“We are still trying to beat the deadline which is end of the year. The idea is just secondary [offering] to sell 10-15 percent of total common shares,” Purefoods president Francisco S. Alejo III said.

Alejo said Purefoods is looking at selling existing shares to private investors or offer to the public.

The Philippine Stock Exchange requires a 10 percent minimum public float for all listed firms. The grace period is until late this year, with erring firms to be slapped with monetary penalties and even delisting.

To date, Purefoods has a mere 0.1 percent free float level. Its shares were last traded on Feb. 15 at P1,010 apiece.

Alejo said Purefoods favors a share sale to an investor group for faster transaction.

“Hopefully we can do it before the end of the year,” Alejo said.

In August 2010, SMC dropped its plan to sell a 49 percent stake in its food unit as the final bidders -- Gokongwei-led Universal Robina Corp. and a partnership between the Campos family of Del Monte Pacific Ltd. and the Po family of the Century Pacific Group of Companies -- sought 100 percent ownership of Purefoods.

Alejo said Maybank ATR Kim Eng Capital Partners Inc. (formerly ATR KimEng Capital Partners Inc.), among other banks, is helping Purefoods in the follow-on offering.

In May 2011, ATK Kim Eng was one of the local underwriters in SMC’s sale of 145.78 million common shares worth $370 million and $600 million worth of exchangeable bonds.

“We are working on the valuation. It is hard to estimate what the value should be,” Alejo said.

However, Alejo said the rosy performance of Purefoods will allow the company to obtain a good value when it sells the shares.

“We continue to be leaders in many categories,” Alejo said.

“We are very happy that we continue to have very strong brand equity and that we continue to be patronized by target markets.” Alejo said.

San Miguel Pure Foods -- which owns the brands Purefoods, Magnolia, Monterey, Star, San Mig Coffee, and B-Meg -- accounts for six of every 10 hotdogs and four of every 10 chickens sold in the country.

While the share sale will primarily be for compliance to rules, Alejo said the company can use extra cash for acquisitions.

“[SMC president Ramon Ang] told us that expansion of Purefoods will be concentrated on food so we are looking at possibilities,” Alejo said.

Profits of Purefoods slumped by roughly half to P574.31 million in the first quarter from P1.096 billion a year ago. Higher costs and expenses tempered the 8.78-percent gain in revenues to P22.4 billion from P20.59 billion.