, March 9, 2005
(STAR) By Paolo Romero  -  If the government can’t raise the funds to purchase more shares in San Miguel Corp. (SMC), President Arroyo instead wants to sell off the government’s 41-percent stake to help her administration raise money for the cash-strapped government.

In her speech yesterday before the World Bank’s 2005 Philippine Development Forum in Davao City, the President said the government had embarked on a privatization program that would include the block sale of the government’s stake in Southeast Asia’s largest food and beverage conglomerate estimated to be worth $1.3 billion.

"We have formed a new economic team that will revitalize our revenue administration and privatization program, including the consolidation of billions worth of government shares in San Miguel Corp. for sale," Mrs. Arroyo said.

The President earlier issued a statement saying she would not allow the government’s shares in the company to be diluted by failing to participate in the food and beverage company’s stock rights offering this month.

SMC is offering one new share for every 10 held by stockholders. If the government fails to subscribe to the stock offering, its equity will shrink by 10 percent.

The President had directed her officials to ensure that the government’s stake in SMC, held by the Social Security System (SSS), the Government Service Insurance System (GSIS) and coconut farmers’ groups, would not be diluted although Finance Secretary Cesar Purisima said on Monday that the government has no money to spend on additional stock investments.

Purisima said P5 billion to P8 billion would be needed to fully subscribe to the offer and maintain the government’s stake.

Mrs. Arroyo had said she wanted the government to control more shares, which would fetch a higher selling price in the future.

Albay Rep. Joey Salceda, chairman of the House committee on economic affairs, said that maintaining the government’s share in SMC at 41 percent is important as it would sell at a higher price, at 15- to 20-percent premium, once offered for sale.

At below 41 percent, Salceda said the government would only have a "veto or blocking stake," which would fetch a lower price in the market.

In light of the fiscal crisis, Purisima said the government would have to find other ways to fund its participation in the SMC stock rights offer.

"Let the GSIS, SSS and the Presidential Commission on Good Government determine if they have funds as the national government won’t interfere," he said.

Salceda stressed that if the government can borrow P80 billion to fund its programs, it can surely protect the interest of farmers and retirees. — With Marvin Sy

Reported by: Sol Jose Vanzi

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