Friday, 24 July 2009

San Miguel eyes more toll roads

Miguel Camus
Business Mirror
http://www.businessmirror.com.ph/home/top-news/13650-smc-eyes-more-toll-roads.html

San Miguel Corp. (SMC) is eyeing more partnerships with the Consunji-led DMCI Holdings Inc. after the two companies signed an agreement for SMC to participate in the consortium building the P15-billion Tarlac-Pangasinan-La Union Toll Expressway project.

At the sidelines of the company’s shareholders’ meeting on Thursday, SMC president Ramon Ang said the conglomerate is exploring other Northern Luzon road projects with DMCI, mentioning a plan to build a road connecting Nueva Ecija to Cagayan Valley, as well as another project connecting Rosario, La Union, to Laoag City in the Ilocos region.

“And we are looking at other opportunities to work with the Consunjis for toll-way projects,” said Ang, adding that the company is currently studying these various proposals.

SMC signed early this week an agreement to invest in Private Infrastructure Development Corp. (PIDC), the group currently developing the Tarlac-Pangasinan-La Union Toll Expressway set to be completed in 2012. PIDC is currently led by DMCI Holdings along with other construction companies.

SMC, which eventually plans to own a majority stake in PIDC, said the group will serve as the toll-way vehicle for the almost 120-year-old conglomerate.

The past two years for SMC were defined as a period of aggressive expansion into high-growth industries like oil refining, power generation and telecommunications. The firm is also eyeing the bulk water services industry through the $1-billion Laiban Dam in Tanay, Rizal.

SMC has recently been taking heavy flak for its aggressive venturing outside its core business, leading some to speculate that the conglomerate is planning to leave the food-and-beverage industry, but the firm’s top official assured may still be a long way off.

“We will not be out of our core business for as long as I am chairman of San Miguel,” Eduardo Cojuangco Jr. told reporters during the same event yesterday. “In fact, I think we will be more competitive in our food business.”

“For the food business, the best [return] we can get is 6 percent. Now, with 6 percent, will shareholders be forevermore happy with this?” asked the 74-year-old company head. “Now, in these things we are getting into, it will not go under 12 percent [return], so it’s double already right there.”

“Our diversification has already been successful,” said Ang.

Still, SMC shareholders on Thursday voted in favor of an exchange offer to convert 1.1 billion common shares to Series 1 preferred shares, which will carry no voting rights and are nonconvertible. SMC said this is meant to appease investors worried over their diversification strategy.

SMC reported a net income of P19.3 billion last year, or a 124-percent increase as compared to the 2007 income. Removing nonrecurring gains, however, SMC’s profit amounted to P7.22 billion, 4 percent more than in 2007.

SMC net income this year jumped 25 percent to P2.83 billion against the first quarter of last year.

It earlier acquired the government’s P30-billion 27-percent stake in power retailer Manila Electric Co., which it will pay over three years plus interest. It has also recently acquired a P1.8-billion 32.7-percent stake in Liberty Telecoms Holdings Inc. and is planning to launch a tender offer after working out management details with partner Qatar Telecom.

The company is also looking to complete a deal in the coming months for the acquisition of a major stake in another telecommunications company under rehabilitation, Express Telecommunications Co. It also maintains an option to buy a majority stake in local oil refiner Petron Corp.

SMC also said it is interested in entering the lucrative mining sector.

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