San Miguel offers to buy back shares

By: Doris C. Dumlao, July 18th, 2013 06:57 AM

SMC president Ramon Ang: Conglomerate was not SMC. AP FILE PHOTO

MANILA, Philippines—Diversifying San Miguel Corp. announced Wednesday a share buyback program and issued a statement debunking rumors linking it to a commentary about a conglomerate at risk of default.

“We would like to clarify that the conglomerate, which was the subject of the news article that referred to an International Monetary Fund report dated April as the source was not SMC. It is unfortunate that certain people have taken advantage of that information to fabricate and spread malicious stories and sow panic in the market to the detriment of our shareholders and the investing public, in general,” SMC president Ramon Ang said in a statement.

Ang maintained an optimistic outlook on the company’s prospects for further growth, citing “strong revenues and consistent profitability that underpin its robust balance sheet.”

As of the first quarter of the year, Ang noted that SMC’s consolidated cash and cash equivalent stood at P152.3 billion while its gearing ratio, at 3.1 times net debt to cash flow based on earnings before interest, taxes, depreciation and amortization (Ebitda), was lower than the 5.5x stipulated in its loan covenants.

With respect to the IMF report, the company pointed out the following:

— No specific conglomerate was mentioned in the report.

— The report does not even remotely suggest that a specific conglomerate is on the verge of default. In fact, it categorically stated that the “likelihood of a default happening is low.”

— The report was written as part of the regular Article IV consultations with sovereign members. IMF came out with such to outline possible scenarios and appropriate sovereign responses.

In view of this “unjust assault” on SMC’s financial reputation, Ang warned that SMC’s management would hold accountable, through all possible means, individual or individuals who directly or indirectly fueled these unwarranted speculations. He said the company would continue to drive value for its shareholders and exhaust every means to protect the value of their investments.

Following a slump in shares caused by the commentary on the IMF report, Ang said in a text message: “SMC can buy back to help small shareholders.”

Asked whether it’s true that SMC has agreed to sell an initial bloc of 10 percent of Meralco to a foreign hedge fund, Ang said there might be offers but SMC had yet to sell.

Shares of Meralco closed on Wednesday at P293 per share, down by 4.18 percent. There are market talks that SMC may soon close a deal to sell an initial 10 percent of the power distributor.

Meralco’s market capitalization at the stock market stood at P344.89 billion as of yesterday.

In the meantime, SMC’s shares have been battered in the last two days due to a commentary quoting an IMF staff report dated April 2013 urging the BSP to tighten its mapping of conglomerates.

Prices stabilized on Wednesday after Ang announced the share buyback. SMC shares closed 1.49 percent higher at P85 per share. On Tuesday, its share price fell by 6.84 percent after the commentary on the IMF report came out.

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