Prospectus Summary: San Miguel Corporation Pref. Series “1″ (SMCP1)

copied from jcmiras.net

This preferred shares of San Miguel Corporation (SMC) was quite controversial when it was  created because this is a conversion from 35% of SMC’s common stocks, which has a voting-right, and part of that converted common stocks to preferred stocks were the contested Coco Levy Funds of the coconut farmers. By converting the common shares attributed to the coco levy funds, the purported  owner of the levy funds losses part-ownership of SMC and its voting rights in exchange of a fixed dividend income.  Also, the Issuer (SMC) can anytime, three years after the issuance, redeem the preferred shares and totally strip all the remaining connection of the levy fund to San Miguel Corporation.

Below is the prospectus summary of SMCP1:

• Issue price: an exchange ratio of one (1) Series 1 Preferred Share for every one (1) Class “A” or Class “B” common share tendered, or Php75.00 per share.
• Dividend Rate: A fixed annual dividend rate of 8.0% which was based on 5-year PDST-F plus a spread determined by the SMC Board.  It is payable quarterly, beginning on the third month after the Issue Date.  If the company’s Board does not declare dividend for the dividend period, dividends on the Shares will be cumulative.
• Redemption: Shares are redeemable in whole or in part, at the sole option of the Corporation, at the end of three years from the Issue Date
• Other Features: The shares are perpetual, non-voting, non-convertible, and non-participating.
• Dividend Rate Step-up: If not redeemed at the end of the fifth year from the issue date thereof (the “Issue Date”), the Dividend Rate shall be adjusted to the higher of (i) the current Dividend Rate, and (ii) the 10-year PDST-F Rate (or such successor benchmark rate) as displayed under the heading “Bid Yield” as published on the PDEx Page (or such successor page) of Bloomberg (or such successor electronic service provider) at  approximately 11:30 a.m. Manila time on the date corresponding to the end of the fifth year from the Issue Date plus a spread of up to 300 basis points.
• Issue Date: Oct. 5, 2009 (??)