Purefoods mulls sale of 15% stake to meet public ownership rule
InterAksyon.com means BUSINESS
MANILA – San Miguel Pure Foods Co. Inc. may likely sell up to 15 percent of its total common shares before the end of the year to comply with the minimum public ownership requirement of the Philippine Stock Exchange.
Francisco Alejo III, Purefoods president, said the company is considering a private placement and a secondary share sale, with preference for the former, to comply with the bourse’s public float rule.
Maybank ATR KimEng Financial Corp. is helping Purefoods in the transaction, but the company may tap more financial institutions as underwriters depending on the issue size, Alejo said.
Maybank ATR is also finalizing the valuation of Purefoods’ shares since there is not much trading in the stock.
Shares in Purefoods, which is 99.8-percent owned by San Miguel Corp., were last traded at P1,010 apiece on February 15, giving it a market capitalization of P168.33 billion.
"It's hard to estimate what the value should be, but we've done pretty well in the last many years. That's a consideration in getting the best value for the company. We continue to be leaders in the many categories," said Alejo.
A six-month suspension awaits companies that don’t comply with the PSE rule by January 1, 2013. Failure to address the matter during the six-month suspension period would merit delisting.
While the primary purpose for the share sale is merely to meet the PSE rule, Purefoods may use proceeds from the transaction to bankroll possible acquisitions that will expand its food business.
Last year, Purefoods raised P15 billion from an offering of preferred shares, bulk of which was used to purchase SMC's five-percent stake in Manila Electric Co.
"We raised funds so it was there and some of our acquisitions didn't push through. San Miguel offered us to invest in Meralco. It was a good investment," said Alejo.
High cost will continue to challenge the company's profitability, Alejo said, even as Purefoods has yet to implement a price increase.
"We continue to suffer because of high cost but our volumes continue to grow. We're very happy that we continue to have very strong brand equity and that we continue to be patronized by our target markets," said Alejo.
In the first quarter, Purefoods’ net income fell 47.61 percent to P574.31 million from the previous year’s P1.096 billion.