Manila's San Miguel board okays share swap plan

MANILA, May 24 (Reuters) - Philippine food and drinks giant San Miguel Corp (SMC.PS) said on Sunday its board approved a plan to give stockholders the option to swap their common shares with preferred shares following a shift in its business strategy.

The conglomerate, which is slowly moving into power, utility and heavy industry to fuel future growth, is trying to appease some shareholders who have raised concerns about its exposure to highly regulated sectors, like power, and lack of experience in these new ventures.

"We are doing this to address concerns from some shareholders about San Miguel's diversification thrust," San Miguel President Ramon Ang said in a statement.

San Miguel, makers of Southeast Asia's oldest beer brand and is the region's largest food and drinks group, had bought a 27 percent stake in power retailer Manila Electric Co (Meralco) (MER.PS) last year and has a pending purchase of a majority stake in oil refiner Petron Corp (PCOR.PS).

Ang said earlier this month San Miguel, together with affiliates, had increased its Meralco stake to 43 percent. He did not give further details on the group's additional acquisition.

San Miguel said on Friday its board approved the company's planned purchase of up to 49 percent of illiquid Philippine firm Liberty Telecommunications Holdings (LIB.PS). It will buy an initial stake of 32.7 percent at about 2.2 billion pesos ($47 million) in the telecoms firm.

San Miguel's financial advisers, Citibank and ATR Kim Eng Capital Partners, said in the same statement the share swap offer would allow shareholders "to assume a different risk profile in the light of the current global financial crisis and the investments of the company in Meralco and Petron."

Shareholders may get 1 preferred share for each common share held. The preferreds, which come with a fixed dividend that is paid with priority over common shareholders, are perpetual, cumulative and non-voting.

The issue price and dividend rate of the preferred shares have yet to be set, but these would likely carry a 30-50 percent premium over current market price of San Miguel's common shares, the company's financial advisers said.

San Miguel has the option to redeem the preferred shares on the third year of the issue.

San Miguel's B shares, open to all investors, and its A shares exclusive to locals, have risen 22.4 percent and nearly 26 percent, respectively, so far this year, tracking the 23.7 percent jump in the main index .PSI in the same period.

($1= 47.04 pesos) (Reporting by Karen Lema; Editing by Rosemarie Francisco and Valerie Lee)