The Philippines: San Miguel Corporation to raise $3 bln from sale of 30% stake in its food and beverage unit

Diversified conglomerate San Miguel Corporation (SMC) is planning to raise $3 billion from the sale of as much as 30 percent of its giant food and beverage unit after the recent consolidation of its beer and liquor businesses into San Miguel Pure Foods Corporation (SMPFC), The Manila Bulletin reported on November 22.

In an interview, SMC President Ramon S. Ang said the planned sale of shares of San Miguel Food and Beverage Inc. may be through private placement and the proceeds will beef up the firm’s warchest for future equity investments.

“There are many who are offering to invest so we think we will probably sell 30 percent of the consolidated company,” said Ang adding that prospective investors are mostly large foreign companies.

SMC said it will be executing a deed of exchange between SMC and SMPFC to convey SMC’s 7.86 billion SMB shares and 216.97 million GSMI shares to Pure Foods as payment for 4.24 billion new SMPFC shares.

SMPFC will be amending its articles of incorporation to expand its primary purpose to include engagement in the alcoholic and non-alcoholic beverage business and change its corporate name to San Miguel Food and Beverage, Inc.

The firm will also be reducing the par value of its common shares to P1.00 from P10.00 per share and its management has been authorized by the board of directors to approve the mechanics for the implementation of the stock split.

Once these are approved by the Securities and Exchange Commission, SMPFC will seek to increase its authorized capital stock to P12 billion from P2.46 billion. From the P9.54 billion hike in capital stock, about 44 percent or 4.24 billion common shares will be subscribed by SMC. The value of the transaction is pegged at R336.35 billion.

A tender offer for the minority stakes in SMB and GSMI will also be undertaken by SMPFC, if required.

Ang said this is just the first phase of the consolidation of SMC’s business units and there will be a second phase.

“Now we are undertaking the consolidation of our food, beer, Ginebra and, hopefully, packaging. And then there are plans for the consolidation of the other businesses,” said Ang explaining that it will be easier for investors to just invest in one company instead of several companies with related businesses.

Meanwhile, San Miguel Brewery Inc. (SMB) is undertaking a consent solicitation for proposed amendments to two trust agreements for its bonds.

In a statement, SMC said this will be for the Trust Agreement dated March 16, 2009 covering its outstanding 10.5 percent Series C Bonds due 2019 and the Trust Agreement dated March 15, 2012 covering its outstanding 5.93 percent Series E Bonds due 2019 and 6.60 percent Series F Bonds due 2022 (collectively the Bonds).

Specifically, SMB is seeking the consent of the holders of the Bonds as of November 8, 2017 (Record Bondholders) to align the terms of Section 9.1(l) (Change of Control) of the trust agreements of all outstanding bonds of SMB.

This will ensure that the trust agreements remain consistent with their original intended purpose that SMB continues to be under the effective control of its parent company, San Miguel Corporation (SMC), while SMC implements its corporate reorganization.

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