June 7, 2011
San Miguel Purefoods readies early buyback
San Miguel Pure Foods Co., Inc. are set to repay investors behind its PHP15-billion share sale (US$347.14 million) ahead of the original due date after corporate regulators approved changes in the wake of the firm's first-quarter income surge and massive fund-raising effort.
The food and beverage arm of diversified conglomerate San Miguel Corp. yesterday said the Securities and Exchange Commission had allowed it to buy back PHP15 billion worth of preferred shares earlier than the five-year repurchase option.
In February, San Miguel Pure Foods offered up to 15 million preferred shares worth PHP1,000 (US$23.14) each, raising PHP15 billion in fresh capital for production expansion and possible acquisitions. Pending the buyback, dividends are payable on March 3, June 3, Sept. 3 and Dec. 3 of every year.
"The preferred shares shall be redeemable in whole or in part, in cash, as and if declared by the board on the third anniversary from the issue date," the food and beverage firm said in the amended articles of incorporation.
The amendment was applied for "to reflect the additional optional redemption features of its preferred shares," San Miguel Pure Foods said in a disclosure.
Furthermore, San Miguel Pure Foods said "the corporation may also redeem the preferred shares in whole but not in part, at any time prior to the optional redemption date, if an accounting event, tax event or a change of control has occurred."
This means the firm may choose to stick to the longer payment period in the event that an auditor states that the funds raised may no longer be recorded as equity due to risks.
New taxation laws coming into effect or an entity acquiring a controlling stake in San Miguel Pure Foods could also trigger a later buyback.
The food company expects to hit PHP90 billion (US$2.08 billion) in revenues this year from PHP80.4 billion (US$1.86 billion) last year on the back of continuous expansion and higher demand, according to earlier reports.
In August, San Miguel dropped plans to sell a 49% stake in its food unit as the final bidders -- said to be Gokongwei-led Universal Robina Corp. and a partnership between the Campos family of Del Monte Pacific Ltd.
and the Po family of the Century Pacific Group of Companies -- sought 100% ownership of Pure Foods.
San Miguel Pure Foods -- the company behind brands such as Purefoods, Magnolia, Monterey, Star, and San Mig Coffee -- claims to account for six of every 10 hotdogs and four of every 10 chickens sold in the country.
Shares in San Miguel Pure Foods, which has a market value of PHP166.58 billion (US$3.85 billion), were last traded on May 11 at PHP999.50 (US$23.13) apiece.
