Danding turns over P57B to coco industry fund

Posted at 10/05/12 10:46 PM

PCGG remits P56.5-B to Treasury

MANILA (UPDATE) - San Miguel Corporation (SMC) has managed to buy its way out of a decades-old ownership struggle over a substantial stake in the company allegedly bought using coco levy funds from the Marcos era.

On Friday, SMC Chairman Eduardo 'Danding' Cojuangco himself turned over checks worth billions of pesos to the Coconut Industry Investment Fund (CIIF) for the buy-back of Series 1 preferred shares in San Miguel held by the CIIF.

The money was later turned over to the National Treasury by the Presidential Commission on Good Government (PCGG).
It will be held until government decides how to use it best to benefit the farmers victimized by the martial law levy.

The Kilusang Magbubukid ng Pilipinas (KMP) said this is a victory for the farmers.

“Pabor ito sa mga magsasaka sa mga niyogan dahil hindi na sa control ni Danding Cojuangco,” said Willy Marbella, secretary general of KMP.

Cojuangco, who was accused of buying the shares using coco levy funds for his own financial gain, said that with the turnover, "we have achieved our objective of giving to the coconut farmers and the industry the means for them to regain their competitiveness through the use of these funds."

While farmers won't likely agree with Cojuangco's statement, analysts said San Miguel does come away from the situation in a better position.

Greg Ilag, analyst at AB Capital, said the transaction gives the majority owners, including Cojuangco, more control of the company, eliminating any conflict between shareholders and various claimants, while not costing San Miguel too much.

"The cost won't affect SMC's financial status. It gives the owners more control, minimizes or eliminates conflicts between shareholders and improves SMC's public image," he said.
SMC funded the redemption by selling 80-billion pesos worth of Series 2 preferred shares, which pay out a lower dividend than the Series one preferreds, so San Miguel is a winner, and the farmers are winners.

But there is one more hitch.

“Ang usapin ngayon, saan gagamitin at paano ita-trato ang pondong ito, para sa pag-aari ba ito ng gobyerno or pag-aari ba talaga ito sa niyogan?" asked Marbella.

"Ibalik direkta sa mga magsasaka sa mga niyogan dahil ikinolekta ito na cash din sa mga magbubukid sa niyogan,” he said.

While the farmers want the funds redistributed, it's not up to them.

In January, the Supreme Court ruled that the stake in San Miguel will be owned by government, and it will be up to them to determine the best way to use it, for the benefit of the coconut farmers and the coconut industry.

"These shares shall belong to the government, which shall be used only for the benefit of the coconut farmers and for the development of the coconut industry," the ruling says.

Did gov't get a good deal for SMC shares?

There is also another issue: did the government get a good deal for its shares in San Miguel?

Separate statements by the Cojuangco camp and the Presidential Commission on Good Government (PCGG) gave conflicting numbers.
Valuation of government-owned San Miguel shares

San Miguel group estimate: P57.6 B
PCGG estimate: P56.5 B
Media report: P72.7 B
Supreme Court ruling: P84.3 B

In its press release, San Miguel said the P57.6 billion it paid to the CIIF already counts for not only what the preferred shares are worth but also the dividends from those shares dating back to 1984.

The PCGG, meanwhile, said it has remitted to the National Treasury today just P56.5 billion.

Rewind to October this week, the Manila Times announced that Cojuangco is set to redeem the government-held preferred shares on October 5.

It put the shares' value at P72.7 billion, excluding dividends which it estimated at P22 billion.

January's Supreme Court ruling valued them at P84.3 billion, with quarterly dividends over the last two years worth P8.8 billion.

This is about the same amount being claimed by the coconut farmers of the KMP.