THE Presidential Commission on Good Government (PCGG) will ask food and beverage giant San Miguel Corporation (SMC) if government funds, mostly from coco levy shares, are used to acquire a stake of the Government Service Insurance System (GSIS) in the Lopez-owned power utility firm Meralco.

PCGG officer-in-charge Narciso Nario said that while they are not against the move of SMC to expand and get out of its core business, they would just like to ask the company through the Office of the Solicitor General (OSG) if it used coconut levy funds in purchasing the GSIS shares.

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He said through an inquiry, the coconut farmers would be assured that the contested shares are still safe.

"We don't own San Miguel we only have a certain portion. But, if and when they use the sequestered shares then they (referring to SMC) will have to seek authority from the court, the bottom line is, if it has to do something with the sequestered shares, then that's what we would just want to know," he said.

Nario was careful though in speculating on the possibility of the funds coming from the contested shares.

"We are not objecting to move. Only if the contested shares are used," said the PCGG official.

In a disclosure to the stock exchange, San Miguel said it had entered into an agreement with GSIS for the insurance agency's 27 percent stake - equivalent to 300,963,189 shares - in Meralco.

The company also said it was eyeing a stake in Petron Corp., and had initiated talks with the Ashmore Group, which this year took control of the refiner.

It has agreed to pay P90 per share for Meralco, more than double the firm's closing price of P44.50 last Monday. The Lopez-led distributor's shares hit a 52-week high of P89.50 in December last year.

Winston Garcia, president and general manager of GSIS, said San Miguel would pay the pension fund around P30 billion over three years, broken down into P27.5 billion as the total sale price and P2.5 billion in interest payments.

San Miguel announced its agreement with GSIS long after the stock market - which plunged by a record 12.3 percent - had closed for the day.

Its moves, the firm said, were in line with plans to venture into "high-growth industries" such as mining, power, infrastructure, water, other utilities, and property.

Meralco president Jesus Francisco said the company "welcomes the new change in ownership (of the stake)."

"We are happy that a very reputable company is putting more value to (Meralco) than what the market has put. San Miguel has been known as a professionally-run company although I do not know how the market will react to the news," Francisco said.

"I do not know if San Miguel will be active or passive owners but as an owner of a significant block of shares, they will be represented in the board and will more likely be involved in the company's decision-making," he said.

On Monday, San Miguel said its board of directors approved an alliance with Indonesian firm PT Bakrie and Brothers for the latter's PT Bumi Resources operations.

PT Bumi is engaged in mining, oil, gas, and energy-related projects.

San Miguel said PT Bumi, through various subsidiaries, owns the world's largest export coalmine with operations in East and South Kalimantan. (AH/Sunnex)

For more Philippine news, visit Sun.Star Bacolod.

(October 29, 2008 issue)
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