Farmers to lose claim in San Miguel with share conversion
Coconut farmers may lose their ownership in San Miguel Corp. (SMC) if they allow their common stock to be converted to preferred shares. This was disclosed by two parties interviewed separately by GMANews.TV. While share conversion will reportedly earn more dividends for coconut farmers â whose 24 percent SMC stock is currently held by government â the preferred shares may be bought by SMC at a later date, a source told GMANews.TV. âAfter say, a period of five years, San Miguel may decide to buy back the preferred shares and turn them into treasury shares," the source said. The view is shared by Romeo Royandoyan, executive director of Centro Saka Inc., which, among others, represent coconut farmers. Both treasury and preferred shares have no voting rights. Preferred shares earn higher dividends but treasury stocks have no such payouts. The 24 percent stake in SMC is estimated at P19.11 billion, based the companyâs latest stock prices of P66 apiece as of Fridayâs trading at the Philippine Stock Exchange. The stake was bought using coconut levy funds collected by the Philippine Coconut Authority (PCA) from 1973 to 1982. During the period, the agency was chaired by Eduardo âDanding" C. Cojuangco Jr., a known Marcos associate who currently sits as SMC chair and chief executive officer. In various decisions, the Supreme Court and the Sandiganbayan, the Philippinesâ anti-graft court, have said that coconut levy funds are beneficially owned by coconut farmers. CSI, which represents coconut farmers, also belied SMCâs announcements that it will pay preferred shareholders eight percent in dividends per year. The payout âis not really guaranteed" since it remains âsubject to the availability of retained earnings of SMC," the CSI said in a statement released on Friday. âThe SMC board could just divert funds available for dividend declaration into other investments or for expansion leaving nothing for the government and the small coconut farmers," it added. The transaction may even require coconut farmers â through the government â âto pay for the transfer and tax consequences of the deal," CSI said. Moreover, the coconut farmersâ SMC common shares âshould have commanded a premium price because these are capable of seating at least three persons to the SMCâs board of directors," the groupâs statement said. The 24 percent shares in SMC will be redeemed at P75 per share, a price that may rise in the future, CSI said. This explains why Centro Saka says that the share conversion is âgrossly disadvantageous to the government and the small coconut farmers." The whole coconut levy issue âshould not be reduced to the computation of profits that would be ostensibly gained from the transaction," CSI said. âThe issue is about social justice for the beneficial owners of the coco levy. The issue is about the PCGGâs apparent exclusion of genuine small coconut organizations from the consultation process and its shameless collusion with organizations [that] do not represent the small coconut farmers." - With RJA Basilio Jr., GMANews.TV