Pure Foods to sell shares, bonds after soured deal

After private investors retreated from a deal to buy a 49-percent stake in San Miguel Pure Foods Co. Inc., the food maker said it is now planning to raise up to P60 billion by selling preferred shares and bonds. Pure Foods told the Philippine Stock Exchange on Wednesday that the proceeds from the sale will finance the plan of parent San Miguel Corp. (SMC) to diversify into “high-yielding industries," such as power generation, utilities, and infrastructure. The company said it will sell the shares for as much as P50 billion or a premium of about 115 percent. The shares will come from 75 million common shares reclassified into preferred non-voting shares, with shareholders denied their pre-emptive rights to the issue. Pure Foods said that subsidiaries San Miguel Foods Inc. and San Miguel Mills Inc. will sell up to P10 billion worth of fixed-rate long-term bonds. The terms and conditions for both offers have yet to be determined, Pure Foods said in its disclosure. The company plans to hold a special stockholders meeting on Oct. 29 to secure approval from shareholders. SMC, which owns 99.92 percent of Pure Foods, said last month that it was open to selling a maximum of 49 percent of the food unit. But the buyers wanted to buy more than that. Pure Foods, which owns the flagship Purefoods brand alongside Magnolia, Monterey, Star, San Mig Coffee, and B-Meg, has an “enterprise value" of $1.8 billion, according to San Miguel officials. In July, San Miguel announced the plan to raise at least P75 billion through the issuance of 1 billion common shares from its unused capital stock and treasury shares. The company said the shares will be sold at a minimum of P75 each, or a 9-percent premium at that time. Other fund-raising measures the company mulling on were the sale of an additional 14-percent stake in SMC's packaging subsidiary, San Miguel Yamamura, to Japanese partner Nihon Yamamura Glass Corp. Ltd. for $100 million. —JE/VS, GMANews.TV