E-Malt.com News article: The Philippines: San Miguel Corporation asks for more time to comply with minimum public ownership requirement for its beer and property subsidiaries

Diversified conglomerate San Miguel Corporation (SMC) still hopes to be able to maintain the public listing of its property and beer subsidiaries and has asked the Philippine Stock Exchange (PSE) for more time to comply with the minimum public ownership requirement, Manila Bulletin reported on December, 4.

“We are still trying to do it. Our food unit has already complied. I think, for the beer and property units, we can still do it,” said SMC president Ramon S. Ang in an interview.

SMC recently sold a portion of its shares in San Miguel Pure Foods Company to raise P6 billion and increase the food and beverage unit’s public float to about 15 percent.

Still having a public float of less than the 10 percent minimum are San Miguel Properties Inc. and San Miguel Brewery Inc. (SMBI).

Ang said that “we have asked the PSE for a little extension so we can do it (raise public float), but we do not know if they will allow it.”

He added that, while they have already made the request to the PSE, they did not ask for a specific timeframe within which they intend to raise the public float of SMC’s property and beer units.

However, Securities and Exchange Commission chairperson Teresita Herbosa noted that, even if the PSE grants an extension, the company still has to seek the SEC’s approval.

She pointed out though that, the company and its shareholders will still have a difficult time since its shares will still be subjected to higher taxes even though it’s still listed.

The government has declared that any firm not complying with the minimum public ownership rule by January will cease enjoying the preferential tax rates imposed on the sale of their stocks since this is reserved for listed firms with at least 10 percent public float.

SMC has been having difficulty in raising the public float of SMBI since it holds shares giving it just a slim majority of the subsidiary while most of the remaining shares are owned by partner Kirin Brewery of Japan.

Ang explained earlier that SMC has no intention of giving up its majority ownership of SMBI so they cannot sell secondary shares. On the other hand, Kirin also does not want to reduce its ownership of SMBI since it is a very profitable business.

Selling new primary shares will not solve the problem since this will still result in SMC being diluted to being the biggest shareholder but no longer the majority shareholder.

Owning less than a majority stake in SMBI will mean that SMC will not be able to consolidate SMBI’s earnings into its financial statement.

12 December, 2012