MANILA - Majority of San Miguel Corp.’s minority shareholders have availed themselves of the conglomerate’s offer to swap their common shares for preferred shares, seeking a safe haven from attractive returns amid concerns over the food and beverage giant’s diversification strategy.

In a disclosure to the stock exchange on Friday, San Miguel said a total of 873 million shares would be converted to preferred shares. This was equivalent to 27.6% of the company’s total outstanding stock, lower than the expected 1.104 billion common shares.

"Accordingly, San Miguel has scheduled the execution of the special block sale of the subject common shares on the Philippine Stock Exchange next week, October 9," the company said.

A company official who requested anonymity said the government’s 24% stake in San Miguel was among those that were converted after the Supreme Court gave its go-signal to the exercise.

San Miguel said the review and processing of documentation for the completion of the share exchange and preparations for the special block sale have been delayed due to shortage in personnel, most of whom were unable to report for work due to tropical storm Ondoy. The company was supposed to work on the transactions last Friday.

Jun B. Calaycay of Accord Capital Equities Corp. said some investors did not participate and still opted to "play with the risk and see the potential of the [company’s diversification]."

"During the early part of San Miguel’s diversification plans, investors were a bit shaken but right now, they are more confident and are prepared to ’ride along with the company’," he added.

Mr. Calaycay said those who opted to swap their common stocks for preferred shares could be trying to balance their portfolios by using the assured 8% dividend return of preferred stocks as "buffer."

"Some of the stockholders are trying to beef up their portfolios by giving it the balance. If they have the 8% dividend per annum that San Miguel’s preferred shares offer, then their other portfolios can take the [stock market’s] risk," he said.

The price per preferred share was set at P75 apiece, higher than the common shares’ P51 per share market price when the offer was first announced. The P75-per-share price is also higher than the closing price of San Miguel’s "A" shares, exclusive to locals, and "B" shares, open to all investors, which finished at P65.50 and P66 apiece, respectively, on Friday.

Since announcing its plans to venture outside its core food and beverage business two years ago, San Miguel has already bought a stake in a number of companies, which include Manila Electric Co., Petron Corp., Liberty Telecommunications Holdings, Inc., and Private Infrastructure Development Corp.

San Miguel also won separate auctions for the Sual coal-fired power plant and the 620-megawatt Limay Combined Cycle Power plant in Bataan, marking its entry in power generation. It is also awaiting the government’s decision on its unsolicited offer to build the P52-billion Laiban Dam in Rizal.