Despite a court ruling against any sale of government-held stocks in San Miguel Corporation (SMC), the Philippine government is still keen to sell convertible bonds to securitize a 27% stake in the co…
Despite a court ruling against any sale of government-held stocks in San Miguel Corporation (SMC), the Philippine government is still keen to sell convertible bonds to securitize a 27% stake in the company. According to Finance Minister Jose Pardo, government lawyers are seeking to ensure that the court ruling does not cover the government“s plan to use the SMC shares as collateral in the sale of convertible bonds. Judges had ruled that the SMC shares seized by government remain in the custody of the court, effectively blocking any sale. This has blocked a plan to use the proceeds of the sale to develop the coconut industry. “In the first place, the government“s intention is just to use the interest earned from the proceeds of the (bond) sale,” said Pardo. “It never assumed that we will spend the proceeds or sell the shares without court approval.” The government hopes to raise around 50 billion pesos from the sale of convertible bonds, with SMC shares as collateral. The proceeds will be part of the initial capital of a trust fund for the development the coconut industry, a major source of revenue for the country. Pardo said the convertible bond“s maturity is planned for at least three years to allow the court enough time to decide on the ownership of the SMC shares. He also said that at least three foreign groups have proposed to underwrite the convertible bond offering, but refused to identify any of them.