San Miguel-coco levy saga ends

Rappler.com
The amount will go to programs benefiting the coconut industry and its farmers

MANILA, Philippines – After a decades-long wait, farmers will now benefit from multibillion-peso coco levy funds invested in diversified conglomerate San Miguel Corp.

On Friday, October 5, San Miguel formally turned over P57.6 billion to sequestered and now government-owned Coconut Industry Investment Fund (CIIF), which supports over 3 million farmers all over the country, as payment for around 700 million Series 1 preferred shares it redeemed from the group in September.

The shares were equivalent to a 24% stake in San Miguel.

No less than San Miguel chair, CEO and former major shareholder Eduardo Cojuangco Jr., whom the government battled for the right over another block of San Miguel shares, awarded the check to CIIF president Jesus Arranza.

The amount is expected to help fund programs benefiting the coconut industry and its farmers.

It came from the P80-billion proceeds that San Miguel raised from a Series 2 preferred share offering in September.

The share offer was launched a day after the Supreme Court ruled with finality that the shares belonged to the government.

Development, livelihood programs

Arranza said the funds will go to research and development as well as livelihood programs for coconut farmers.

He said these programs will help improve the competitiveness of the coconut industry.

“These funds come at the most opportune time for the farmers as we have to prepare the coconut industry against competition coming from palm oil,” he said.

“With palm oil growing in popularity and demand, we need to create a niche for coconut products in the higher value added segment. That way, we will be able to sustain the coconut industry for the long term and provide better, more stable income to the farmers,” he added.

The Palace was set to reconvene the Presidential Task Force on the Coco Levy Fund (PTFCL) October 5 to determine where the recovered coco levy funds should go, deputy presidential spokesperson Abigail Valte earlier said.

President Benigno Aquino III, nephew of Cojuangco, ordered the creation of the PTFCL after his assumption in office to determine how best to utilize the coco levy funds. The PTFCL is composed of the Presidential Management Staff, National Anti-Poverty Commission, Presidential Commission on Good Government, Department of Agriculture, Department of Agrarian Reform, Department of Finance, Department of Budget and Management, and Philippine Coconut Authority.

Share conversion

Arranza said the P57.6 billion includes not only the proceeds from the redemption of the Series 1 preferred shares, but also dividends dating back to 1984.

The San Miguel board redeemed the shares using funds it raised from an P80-billion Series 2 preferred share offer in September — the largest issuance in Philippine corporate history.

The CIIF’s shares used to be common shares. However, in a controversial move before the 2010 elections, the government converted them to preferred, taking away their voting rights.

Preferred shares pay higher and consistent dividends, but carry no voting rights.

Common shares, on the other hand, do not promise consistent yields but entitle holders to vote in company matters such as election of the board of directors and approval of business plans.

SC decision

The shares and the 14 CIIF companies that held them were sequestered by government after the 1986 Edsa People Power Revolution, triggering a legal battle that spanned over two decades.

The government argued the shares were acquired through funds from the levy collected by the administration of the late dictator Ferdinand Marcos from coconut farmers starting in the mid-70s.

In a September 4 ruling, the Supreme Court ruled with finality that the CIIF and the shares and all the dividends they earned  are owned by the government and should be used exclusively for the benefit of the coconut farmers.

The government, meanwhile, also ran after another block of shares in San Miguel — the one awarded by the high court to Cojuangco.

The Supreme Court ruled with finality in April 2011 that Cojuangco rightlfully owned 20%, representing 490 million shares, of San Miguel.

Cojuangco this year exited the conglomerate, selling the bulk of his stake to his righ-hand man and San Miguel’s President, Ramon Ang. – Rappler.com