MANILA - Civic group Kilosbayan on Thursday branded as a form of plunder a government plan to convert its sequestered shares in listed conglomerate San Miguel Corp. (SMC) into higher-yielding preferred shares.

In a press conference, Kilosbayan convenors ex-senators Jovito Salonga, Bobby Tanada and others said the government already won ownership of some 753.8 million common shares in SMC, but the administration, through Solicitor General and Justice Secretary Agnes Devanadera, is still entering a compromise agreement involving the conversion of the shares.

"The administration's proposal is an outrageous attempt to enter into a compromise agreement involving a case the government has already won in the Sandiganbayan in 2004. If the Sandiganbayan's decision is affirmed, the full value of the shares will become government property," Salonga said.

Devanadera has requested the Supreme Court to allow the government to convert its sequestered SMC common shares amounting to about P57 billion into preferred shares. If this happens, the government will give up its voting rights and lose its representation in SMC's board.

Unlike common stocks, preferred shares have a higher claim on the assets and earnings of the company. However, they don't have voting rights. San Miguel has the option to redeem the preferred shares on the third year of the issue.

San Miguel earlier disclosed plans of converting about 1.1 billion common shares, representing roughly 35% of the company's total outstanding stock. The move is in line with the company's diversification strategy to further improve its revenue stream.

It also said lifting the sequestration of the shares will also mean that SMC chairman Danding Cojuangco and associates can buy back the shares.

Kilosbayan said the timing of the conversion is suspicious. It said the scheme is nothing less than a license for the Arroyo administration to release and use billions of funds in the last days of its regime.

The release of the funds, it added, will only enrich the administration's allies and will affect the results of next year's elections.

Prof. Gary Olivar, Presidential Spokesperson for Economic Affairs, said the allegation that government will use its profit on this transaction for the elections is "a wholly unrelated, totally speculative, and perhaps even maliciously motivated charge."

"We hope that Kilosbayan will behave more responsibly than that, and we trust that they will continue to join government in monitoring the future progress of this transaction for transparency and compliance with applicable laws and regulations," he said.

He noted that the preferred shares, though non-voting, have their own advantages as a class of securities compared to common shares.