In order to satisfy their creditors so as not to hamper their diversification plans, San Miguel Corp (SMC), will pre-pay some of their debts to the tune of $1.2 B.
This is so that they can sidestep a cap placed by some creditors, limiting to only a maximum of 10% of their capital which they can spend on none core business investments. Those none core businesses are their acquisition activities of energy assets such as majority share in Philippine Oil Refiner, Petron Corp and a huge block of energy distributor, MERALCO.
The money to pay the $1.2 Billion loan will be obtained from their proposed sale to Kirin of their stake in San Miguel Brewery Inc. The sale is expected to net $1.26 Billion. More moves like these from San Miguel might be expected in the near future, but they also announced that despite their planned sale of some of their shares in their subsidiaries, they will maintain a 51% stake to ensure control.
This report however raises questions as to the liquidity of San Miguel in pursuing its diversification. Pointing out that a failed bond float is the main culprit as to the reason why SMC is pushing for the sale of their stake in their brewery to Kirin. The bond float could have failed due to lack of investor interest as well as the credit crunch.
San Miguel’s announcement of offering to sell their shares in their Brewery came as a shock to me because San Miguel has always been synonymous with Beer. And selling even a part of that business would be like shedding their identity and skin.
[source]
Category: San Miguel
