SMC sets yields, prices of preferred shares for stock swap

MANILA, Philippines - San Miguel Corp. (SMC), which has bought into non-core businesses, has set higher prices and yields of its soon-to-be issued preferred shares. The move intends to encourage investors to exchange their common shares into the preferred securities, which will also help cut investors’ risks arising from San Miguel’s non-core investments in power and telecommunications. With an issue price of P75 each, SMC’s preferred stock – which will not be listed – will offer a dividend rate of eight percent a year, the company told the Philippine Stock Exchange (PSE). The new class of Series 1 preferred shares, which will have a par value of P5 each, is higher than San Miguel’s common shares traded at the Philippine Stock Exchange (PSE). Shares of San Miguel “A" rose by P4.00 to P60 during Monday’s trading at the Philippine Stock Exchange (PSE). Meanwhile, shares of San Miguel “B," which can be bought and sold by foreigners, climbed by P3.50 to P60.00 during the same trading day. One common share will be swapped with one preferred share, the company said. The transaction will involve an estimated 1.1 billion shares, representing 35 percent of the company’s total outstanding stock. Although preferred shares have a higher claim over the company’s earnings and assets, holders of these securities do not have voting rights. The share swap was undertaken to “address concerns of its shareholders about the company’s new businesses," including investments in Petron Corp., Manila Electric Co. (Meralco), and Liberty Telecommunications Holdings Inc. Citibank and ATR Kim Eng, the company’s share swap advisers, said that the transaction is the company’s “proactive approach to engage with existing shareholders who may seek to assume a different risk profile in light of the current global financial crisis." SMC profits plummeted 76 percent to P2.7 billion during the first three months due to the lack of one-time gains it had last year. - GMANews.TV