Farmers to lose claim in San Miguel with share conversion

Coconut farmers may lose their ownership in San Miguel Corp. (SMC) if they allow their common stock to be converted to preferred shares. This was disclosed by two parties interviewed separately by GMANews.TV. While share conversion will reportedly earn more dividends for coconut farmers – whose 24 percent SMC stock is currently held by government – the preferred shares may be bought by SMC at a later date, a source told GMANews.TV. “After say, a period of five years, San Miguel may decide to buy back the preferred shares and turn them into treasury shares," the source said. The view is shared by Romeo Royandoyan, executive director of Centro Saka Inc., which, among others, represent coconut farmers. Both treasury and preferred shares have no voting rights. Preferred shares earn higher dividends but treasury stocks have no such payouts. The 24 percent stake in SMC is estimated at P19.11 billion, based the company’s latest stock prices of P66 apiece as of Friday’s trading at the Philippine Stock Exchange. The stake was bought using coconut levy funds collected by the Philippine Coconut Authority (PCA) from 1973 to 1982. During the period, the agency was chaired by Eduardo “Danding" C. Cojuangco Jr., a known Marcos associate who currently sits as SMC chair and chief executive officer. In various decisions, the Supreme Court and the Sandiganbayan, the Philippines’ anti-graft court, have said that coconut levy funds are beneficially owned by coconut farmers. CSI, which represents coconut farmers, also belied SMC’s announcements that it will pay preferred shareholders eight percent in dividends per year. The payout “is not really guaranteed" since it remains “subject to the availability of retained earnings of SMC," the CSI said in a statement released on Friday. “The SMC board could just divert funds available for dividend declaration into other investments or for expansion leaving nothing for the government and the small coconut farmers," it added. The transaction may even require coconut farmers – through the government – “to pay for the transfer and tax consequences of the deal," CSI said. Moreover, the coconut farmers’ SMC common shares “should have commanded a premium price because these are capable of seating at least three persons to the SMC’s board of directors," the group’s statement said. The 24 percent shares in SMC will be redeemed at P75 per share, a price that may rise in the future, CSI said. This explains why Centro Saka says that the share conversion is “grossly disadvantageous to the government and the small coconut farmers." The whole coconut levy issue “should not be reduced to the computation of profits that would be ostensibly gained from the transaction," CSI said. “The issue is about social justice for the beneficial owners of the coco levy. The issue is about the PCGG’s apparent exclusion of genuine small coconut organizations from the consultation process and its shameless collusion with organizations [that] do not represent the small coconut farmers." - With RJA Basilio Jr., GMANews.TV