San Miguel eyeing Asian carrier, broadcasting business

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MANILA - San Miguel Corp. is not yet done with its acquisition spree as it is evaluating at least 10 deals to expand its business, including a possible investment in a regional airline.

"We are not resting and we are evaluating all these opportunities being offered to us," Ramon Ang, SMC president and chief operating officer, said during the company's annual stockholders meeting.

Eduardo Cojuangco, SMC chairman and chief executive, said the conglomerate is looking at pouring new investments in power, mining and the oil and gas segments.

The conglomerate, through Philippine Airlines, plans to invest in a regional airline, which Ang considers as an opportunity "to forever solve the problem of Category 2."

"There are several opportunities for PAL to acquire other companies in the region to have good synergy in operating the AOC of this airline going to the United States or Europe," he said, referring to the air operating certificate.

The Federal Aviation Authority placed the Philippines under "Category 2" status, preventing local airlines from expanding operations in the United States.  PAL is the only local carrier that that flies to the US.

SMC recently added the airline to its growing portfolio of businesses after purchasing a 49-percent stake in Trustmark Holdings Corp. and Zuma Holdings and Management Corp., majority shareholders of PAL Holdings Inc., which owns PAL and its budget unit Air Philippines Corp.

Cojuangco said SMC is focusing a great deal of its efforts in the country's flag carrier. PAL is creating a master plan that will lower its operating costs. The airline will also acquire 100 aircraft in the next five to seven years.

The PAL acquisition will kick in on its second year since SMC has yet to consolidate the airline into its financial statement this year, Ang said.

“Seriously considering” broadcast industry

SMC is also "seriously considering" entering the broadcast industry, but declined to elaborate.

The planned acquisitions will be funded through the company's internal cash flow and financing, Ang said.

Cojuangco said the reshaping of SMC will have a significant impact on its financials, allowing the company to reach its P1-trillion sales target in the near term, double the P536 billion it posted in 2011.

Last year, SMC's new businesses of oil refining and power contributed 63 percent to sales.

With the Philippine conglomerate’s recent investments in Exxon Mobil's downstream oil business in Malaysia, and in the firms operating the Skyway and South Luzon Expressway, Cojuango said SMC will continue to grow significantly, representing a fundamental shift in its business.

"By 2015, our infrastructure projects will begin generating significant cash flow, and once finished, our upgrade of Petron's Bataan refinery will result in greater efficiencies, a shift towards more profitable, value-added products and better margins," Cojuangco said.

While SMC is aggressively expanding into high-growth industries, Cojuangco said the company will continue to pursue growth opportunities in its traditional food and beverage businesses.

The conglomerate has been trimming its stake in its traditional businesses since 2007 to support its diversification into infrastructure, power, oil retailing, telecommunications and mining.

Shareholders of SMC approved its planned capital stock hike from P22 billion to P30 billion, which will pave the way for the creation of 1.1 billion Series 2 preferred shares.

Ang said the plan is to offer the Series 2 preferred shares in a single tranche this September, raising gross proceeds of up to P80 billion to refinance existing debt.

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