Philippines: Court awards $600 million worth of stoke to San Miguel chairman in stake ownership dispute

A Philippine anti-graft court dismissed a government claim over a 17.37 percent stake in San Miguel Corp awarding the $600 million worth of stock to the group's chairman, Eduardo Cojuangco, Reuters reported November 28.

The decision, which comes after a two-decade dispute and is open to appeal, allows Cojuangco to sell his shares in Southeast Asia's largest food and drinks conglomerate, if he wants to.

The government has said it wants to sell another block of San Miguel shares, totalling about 24 percent of the company, next year after a final ruling on the ownership of the stake. The court has awarded that block to the government, but coconut farmers claiming the shares have filed an appeal.

Analysts said the government and Cojuangco may team up to offload their respective stakes in San Miguel in a joint sale early next year. At current prices, Cojuangco's stake is worth about 25 billion pesos and the government stake 35.6 billion pesos.

Cojuangco claims he took personal loans from the United Coconut Planters Bank (UCPB) to fund his purchase of the shares, which originally amounted to around 20 percent of San Miguel, before it was diluted by a rights offer.

But the government said Cojuangco used funds from a levy collected from coconut farmers during the rule of dictator Ferdinand Marcos.

The court had earlier declared the coconut levy as public funds and owned by the government.

In a 54-page decision, the anti-graft court said the government failed to prove allegations that Cojuangco used coconut levy funds to buy his shares in San Miguel, as well as a possible misuse of UCPB funds. Cojuangco was UCPB president at the time he took the loans.

Cojuangco was a close business associate of Marcos and fled the country on the same plane as the dictator in 1986 after a popular revolt. He was chairman of San Miguel at the time.

In 1998, the court gave him voting rights over the contested shares, allowing him a dramatic comeback to manage San Miguel -- just weeks after actor-politician Joseph Estrada, also a close political ally, was declared president.

Cojuangco, who now lives mostly in Australia, is also known to be close to current President Gloria Macapagal Arroyo. His nephew, Gilberto Teodoro, is Arroyo's defence secretary.

San Miguel B shares, open to foreigners, have fallen 45 percent from a 2007 high in mid-June, while the A shares have lost 41 percent from an all-time high in May.

San Miguel, a 117-year-old brewer that is one-fifth owned by Japan's Kirin Brewery (2503.T: Quote, Profile, Research), announced a dramatic change in focus earlier this year, saying it would concentrate on energy, mining, infrastructure and water utility. It plans to separately list its domestic brewing business next year.

Earlier this month, it sold food and beverage businesses in Australia and New Zealand for nearly $3 billion.

30 November, 2007