Gov’t may lose 1 seat in San Miguel

The government might lose one board seat in San Miguel Corp. (SMC) as the accumulated dividends of the Coconut Industry Investment Fund (CIIF) amounting to P2.1 billion may not be enough to cover the government’s full participation in the company’s stock rights offering this month.

Presidential Commission on Good Government (PCGG) Chairwoman Haydee Yorac told reporters at the Club Filipino in San Juan yesterday that even if CIIF dividends were used, it may not be enough to retain all five board seats held by the government in SMC.

"There is nothing we can do. We have to be content with the P2 billion. We might lose at least one seat," Yorac said.

SMC is offering one new share for every 10 currently held by stockholders. Failure to subscribe to the stock offering will reduce the government’s 41-percent equity in the blue-chip company.

The government plans to participate in the SMC stock rights offer to prevent the dilution of its equity. However, it has to raise around P4.5 billion to participate fully in the stock purchase.

Yorac said it would be difficult for the government to borrow more money to buy additional SMC shares as this would mean the government would have to pay the fresh loan’s interest in addition to debt on previous loans.

She gave assurances, though, that the PCGG would try its best to come up with other solutions to preserve the government’s stake in SMC.

"We think that government has a duty to conserve its value. We will do our best to save the value of the CIIF shares without subjecting it to the difficulty of paying debts afterwards," she said.

Albay Rep. Joey Salceda, an adviser of President Arroyo, earlier said the government could tap into the P2.1 billion in accumulated dividends of the CIIF to pay for half of the shares the government is entitled to in the SMC rights issue.