Philippine government gains San Mig seat

Company chairman Cojuangco warns of dire consequences if he is replaced as the firm's chairman

By CNN's Amabelle Layug
in Hong Kong

MANILA, Philippines -- The Philippine government has obtained an extra seat on the 15-man board of beer and food giant San Miguel Corporation (SMC).

The government, through the state pension fund Government Service Insurance System (GSIS), has solicited enough proxies to win one board seat in SMC.

The GSIS has more than 7 percent in San Miguel, equivalent to a board seat and a half. The state-run Social Security System has about 5 percent, or enough for one board seat.

The Presidential Commission on Good Government holds a 27 percent stake in San Miguel, or the equivalent of five board seats, when it sequestered the shares from Cojuangco after downfall of the late strongman Ferdinand Marcos.

The shares were sequestered on claims they were bought using a levy fund collected from coconut farmers. But Cojuangco claimed he bought the shares using his own money.

Cojuangco was a close business associate of the late dictator, and later a known ally of deposed president Joseph Estrada.

Earlier, the Arroyo administration hinted that a majority control over the board would pave the way for Cojuangco's ousting.

But GSIS president and manager Winston Garcia said there was no plan to oust Cojuangco.

Instead, the Arroyo administration is determined to replace the five directors representing the government's interest in the SMC, nominated by the Estrada government.

But lawyers for the SMC had asked the country's courts to dismiss a government petition to have the board members replaced, citing corporate rules that their terms have yet to expire.

SMC further stressed the five directors were elected by SMC shareholders during the firm's annual shareholders' meeting.

The Arroyo administration stressed that the five Estrada-nominated directors could no longer represent the interest of the incumbent administration and should be replaced.

20 percent growth

Despite the dispute, Cojuangco has projected a 20 percent growth in revenues for the food and beverage giant over the next two years.

Cojuangco cited higher sales and broader market share from SMC's acquisitions under his leadership.

He also said the group would expand into new ventures such as flourmill and other food-related businesses.

Among the acquisitions completed by the SMC group were those of Metro Bottled Water Corp., Sugarland Multi-Foods Inc., Australian premium brewer J Boag & Son, and Coca-Cola Bottlers Philippines Inc. In addition, SMC is now in the process of finalizing the purchase of Pure Foods Corp., the food unit of the Ayala group.

Cojuangco added SMC would continue to be on the lookout for other acquisitions that would allow it to further expand its revenue stream.

"We will look at companies that have synergies with food, soft drinks, liquor, beer and whatever we have right now which would strengthen our position and consolidate things for us," he said.

In 2000, SMC posted a recurring net income of P7.5 billion from P6 billion the previous year on the back of P88.7 billion in sales.

On the beer side, he said that despite the contraction in the industry by 4.2 percent as a result of the economic downturn and lower farm income, SMC's beer division slowed down by only 3 percent.

Analysts favor Cojuangco to stay on as chairman of the giant firm, noting his success in transforming the once flagging SMC into a profitable firm.

Cojuangco, on the other hand, warned that his ousting would have a bad effect on SMC.

SMC wants directors to stay
April 17, 2001
SMC's Estrada nominees face vote
April 16, 2001
Arroyo team wants new chair for SMC
April 2, 2001

San Miguel Corporation
Law-Lib: Philippines Presidential Commssion on Good Government

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