SMPF vice chairman Ramon S. Ang said the company was looking to raise PHP50 billion by selling a mix of preferred shares and debt paper next year to fund its expansion programme and new businesses to include power generation, water and infrastructure.

 

In disclosure to the Philippine Stock Exchange, SMPF said the terms of the preferred share offering such as issue price, dividend rate and payment shall be subject to approval by the Securities and Exchange Commission of the reclassification of the company's common shares to preferred shares.

 

The food processing company reclassified 40 million common shares into non-voting, cumulative and non-participating preferred shares.

 

SMPF's planned preferred share issuance followed failed negotiations between San Miguel and two prospective buyers - the consortium of the Campos family and private tuna canner Century Pacific Group, and Universal Robina Corporation of the Gokongwei family.

 

San Miguel rejected their offers since they wanted to acquire 100 percent of SMPF. The conglomerate was only willing to divest up to a 49 percent stake in the food processing firm.

 

San Miguel owns 99.92 percent of SMPF, which owns the Purefoods, Magnolia, Monterey Star, San Mig Coffee and B-Meg brands.

 

As of end-March 2010, SMPF had PHP121.07 billion (US$2.67 billion) in cash and near-cash assets as against PHP209.4 billion (US$4.78 billion) in the same period a year ago.

 

San Miguel is also planning a PHP75-billion (US$1.71 billion) fund raising program to fund acquisitions as it seeks stronger avenues to fuel growth. It has raised around US$3 billion from asset sales in the past three years.

 

Southeast Asia's biggest food and beverage company is hard pressed to raise funds to cover the purchase substantial stakes in several companies including power distributor Manila Electric Co., oil refiner Petron Corp., Bank of Commerce, Caticlan International Airport and Development Corp., several power plants, toll-road operations and coal mines.

 

For Petron alone, San Miguel would need to shell out around PHP19 billion (US$434.28 million) before the year ends if it decides to exercise an option to buy the remaining stake in SEA Refinery Corp., which holds 50.1 percent of Petron.