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SAN
Miguel Corp. (SMC) lent its retirement plan a total of
P38.112 billion from the third quarter of 2007 until
March 2008. The amount was used to finance the plan’s
acquisition of SMC shares.
However,
it appears now that San Miguel Corp. Retirement Plan (SMCRP)
bought SMC shares in a big block only as a short-term,
and not as a long-term, investment. In short, it was
engaged in trading—that is, buying and selling—SMC
stocks, which would eventually end up in the hands of an
unknown buyer.
Various
filings showed the pension plan’s use of SMC’s corporate
funds, while one disclosure showed the sale of the
acquired shares to a buyer, which SMC did not name.
“On
December 27, 2007, SMCRP entered into a stock-purchase
agreement with a third party for the sale of SMC
shares,” SMC told regulators. “The contract provides,
among others, that the shares be sold at an agreed
price, payable on or before December 31, 2008,
extendible for additional three months up to March 31,
2009, subject to interest.”
The
agreement, however, did not name the buyer or buyers.
“Under
the terms of the agreement, all rights to, interests and
title in and ownership of the shares shall remain with
SMCRP,” the agreement, which SMC disclosed in one
disclosure, showed, “provided that upon receipt of the
agreed down payment, the voting rights shall be
transferred to the buyer.”
A
further provision: “All dividends and other benefits,
except for stock dividends, declared by the parent
company in relation to the shares, shall accrue fully to
SMCRP.
“All
stock dividends declared by the parent company in
relation to the shares shall accrue to SMCRP and the
buyer proportionately to the consideration paid by the
buyer.
“Should
any part of the total consideration remain unpaid as of
March 31, 2009, SMCRP shall have the right to demand
payment from the buyer of the relevant amounts
outstanding, inclusive of interest and penalties.”
SMC said
that as of end-2007, “SMCRP received about P2.628
billion as a down payment for the transaction.”
Advances
IN
filing its third-quarter and nine-month financial report
in 2007, SMC informed regulators about its initial loan
to SMCRP, but did not include the use of the funds by
the pension plan.
SMC said
it “has advances to SMC Retirement Plan which amounted
to of P31.742 billion.” The amount was originally
“subject to interest of 1 percent above the applicable
average 3 months PDSTF [Philippine Dealing System
Treasury Fixing] rate.”
By the
end of 2007, SMC disclosed the use of the loan—which had
increased to P35.721 billion—when it told the Philippine
Stock Exchange (PSE) and the Securities and Exchange
Commission (SEC) that “SMCRP used the proceeds of the
advances mainly for the purchase of the parent company’s
common shares.”
The
filing showed that the pension plan’s investment in SMC
shares “accounts for more than 50 percent of the total
plan assets as of December 31, 2007.” The percentage is
based on the P59-per- share value of the shares,
according to SMC.
As of
end-2007, SMCRP owned 408 common A shares and 136
million common shares, which had market value of P32.096
billion at P59 per share.
Among
SMCRP’s acquisitions last year were 339.349 million SMC
shares owned by SM Investment Corp., which it bought at
P80 per share or a total of P27.148 billion. |
