PHILIPPINE NEWS SERVICE — Food and beverage giant San Miguel Corp. is prepared to invest up to 10 percent of its total assets, or roughly $750 million (P35 billion), on investments in new areas, including power generation, mining, infrastructure, property and bulk water.
San Miguel president and chief operating officer Ramon Ang told reporters following the company’s annual stockholders’ meeting yesterday that the company was primarily interested in bidding for the concession to operate National Transmission Corp.
Ang said San Miguel would team up with Tenaga Nasional Berhad of Malaysia in bidding for TransCo.
San Miguel plans to issue 1.5 billion preferred shares to fund new ventures and acquisitions.
San Miguel chief finance officer Ferdinand Constantino said the company would issue the preferred shares in series, depending on viable business opportunities and prevailing market conditions. The conglomerate has not finalized the terms and conditions of the preferred shares.
Constantino said the company had also not firmed up projects it would pursue in mining, infrastructure, property and water sectors. He added San Miguel would conduct feasibility studies on areas it would invest.
San Miguel chairman and chief executive Eduardo Cojuangco Jr., in a speech before the company’s shareholders, expressed confidence that the new ventures would deliver strong results to the company.
“We want to be in industries that have scale and will grow and we are determined to build leadership positions in key areas where important trends are driving future growth, not just for San Miguel, but for the Philippines, too,” Cojuangco said.
He assured shareholders that the company would be prudent in operating new businesses to ensure optimum growth for the company.
“What we’re particularly excited about is the earning potential that these new businesses can bring. For the investment we are likely to infuse into these new businesses, we’re confident that we can extract highly attractive earnings that would significantly improve our aggregate group margins,” Cojuangco said.
He said food and beverage would remain the company’s core businesses despite the diversification into “new engines of growth.”
“These new businesses that we are looking into will constitute only a fraction of our total portfolio. The much larger portion will still remain our core businesses of food and beverage,” he said.
Shareholders approved the company’s expansion into new projects as well as the transfer of domestic beer assets, excluding land and brands, to a wholly-owned subsidiary in a share swap. San Miguel plans to offer the shares of the subsidiary to the public in an initial offering.
The spin-off, San Miguel said, aimed to provide the domestic beer business the financial flexibility to maximize its operating capacity and revenue-generating potential and compete more effectively in the industry.