The government was unable to make a full subscription in San Miguel Corp.’s stock rights offering last week due to lack of funds but its veto power and influence is still protected, sans one board seat.
Sources familiar with the situation said so long as the government holdings does not fall below 33 percent, it is still a major block. "Government shares is always (representative of) veto power in San Miguel, that’s all they need and after the rights offering and despite the partial subscription, the government position is still protected." A veto power gives unlimited influence to stop changes or prevent any altering power. From the latin word "veto" it literally means "I forbid."
Prior to the stock rights offering, government through the Presidential Commission on Good Government and pension fund providers Government Service Insurance System and Social Security System has a combined 41 percent stake in the beer and food conglomerate. Eduardo "Danding" Cojuangco, Kirin of Japan and the investing public control the rest of the shares.
Finance Secretary Cesar V. Purisima said the state will not borrow to raise the
P4.5 billion needed for a full subscription and is content with a P2.1billion participation, albeit sacrificing one seat in the board. "We are prepared only to spend that much," he said.
When asked if pension fund providers GSIS and SSS oversubscribed to maintain the PCGG block of 27 percent, Purisima said "ask GSIS and SSS for their plans," adding that he is not privy to their moves with regards to San Miguel’s rights offer last Thursday.
Sources said GSIS and SSS was asked to provide the funds to allow the government to maintain its 27 percent stake in San Miguel held by the PCGG, using coco levy funds.
PCGG wanted to tap GSIS and SSS and provide the
P2.4 billion needed to fully subscribe to San Miguel. They wanted to get pension fund resources so that the National Government will not have to borrow from the Development Bank of the Philippines, which has set aside a standby fund for the stock rights offering.
However SSS President and CEO Cora de la Paz said the pension fund did not provide any cash for the government. "No, we only paid for our share," de la Paz said. Both GSIS and SSS have a combined 14 percent share in San Miguel. SSS paid
P800 million for its five-percent holdings.
In the meantime GSIS subscribed
P900 million to keep its 6.29 percent share, while the remaining balance are paid by its subsidiaries in San Miguel, such as Provident Fund.
GSIS Executive Vice President for Finance Omelita Tiangco said that GSIS, similar to SSS, only subscribed to the rights offering to maintain its current position. She said GSIS did not and will not provide funds for PCGG because these are NG funds.
Based on PCGG data, the agency subscribed to 639,942 San Miguel A shares and 27.95 million San Miguel B shares. The subscription was valued at
P2.13 billion, which is less than half the P4.5 billion subscriptions required to maintain the government’s seven directorship in the company.
San Miguel said proceeds from the rights offering will be used to finance expansion projects here and abroad. (LCC)
