* Shares fall in proportion to decline in San Miguel stock
* San Miguel divests of Top Frontier to unravel
* Top Frontier will need to sell shares to pay debt - CEO
(Adds reason for decline, cross-shareholding background,
comments from CEO, analyst)
By Rosemarie Francisco
MANILA, Jan 13 Shares of Top Frontier Investment
Holdings Inc fell as much as 54 percent on their
market debut as investors questioned the quality of the
Philippine company's chief asset - its stake in indebted San
Investors were also concerned that San Miguel's shares would
extend their more than 40 percent drop since the beginning of
last year, dragging down Top Frontier's shares.
Senior Top Frontier executives, who also form the management
team at San Miguel, have sought to put some distance between the
Earlier this month, San Miguel unloaded nearly all of its
interest in Top Frontier. San Miguel now owns less than 1
percent of Top Frontier compared with 49 percent previously.
San Miguel cut its stake by paying out its shareholders with
a dividend consisting of 240.2 million Top Frontier shares.
Elimination of the confusion among shareholders caused by
the cross-shareholding was the main reason behind the dividend
and subsequent listing, the head of both companies said.
Top Frontier owns 66.1 percent of San Miguel, which has
almost $18 billion in liabilities. Top Frontier's stake in San
Miguel remains unchanged.
The drop in Top Frontier's shares on Monday is in step with
San Miguel's decline, analysts say.
Shares of Top Frontier closed down 44.4 percent. That is
almost 10 times the 5.6 percent that San Miguel shares have
fallen since Jan. 2, when the conglomerate awarded dividends in
the form of one Top Frontier share per 10 San Miguel shares
Top Frontier shares dropped to 98.95 pesos compared with a
listing price of 178 pesos, based on a valuation by independent
advisor Punongbayan & Araullo.
The listing price was based on par with Top Frontier's
assets, while San Miguel shares are trading below net asset
value, said AB Capital Securities analyst Gregg Ilag.
"I think the market is doing the same pricing mechanism for
the Top Frontier shares" by pulling them below net asset value,
San Miguel shares ended down 3.25 percent at 58.05 pesos,
compared with a 1.7 percent rise in the benchmark index.
Top Frontier, which Punongbayan & Araullo values at around
$2 billion, listed on the exchange via so-called introduction,
in which privately held shares are offered to the public.
The company has previously said it would consider selling
new shares to the public in 2014 if it sees investment
opportunities or if it needs to pay off debt.
"At some point, Top Frontier needs to sell shares to be able
to pay off some of (its) obligations," Ramon Ang, president and
chief executive of both Top Frontier and San Miguel, said at a
news conference following the listing.
Any such sale would be dependent on market conditions, he
Apart from its stake in San Miguel, Top Frontier also has
interests in gold and nickel mining.
(Additional reporting by Erik dela Cruz; Editing by Christopher