MANILA, Philippines — San Miguel Corporation (SMC)may consider buying back the preferred shares it had issued to the government in exchange for the state’s common shares in the company.

In a mobile phone message, SMC president Ramon S. Ang said “SMC can” when asked if SMC or its top shareholder Top Frontier would be interested in the government’s plan to divest from SMC.

In a message to Bloomberg News, Finance undersecretary John Philip Sevilla said the government is considering the sale of its SMC preferred shares.

In 2009, SMC reported that shareholders accounting for 27.63 percent of its outstanding capital, including the government, had accepted the firm’s exchange offer to convert their common shares into Series "1" Preferred shares.

SMC said a total of 476.3 million Class A shares and 396.88 million Class B shares were offered to be converted to Series "1" Preferred shares. Once converted, these shareholders earned a higher annual dividend but no longer have voting powers.

Ang said earlier that the principal reasons given by shareholders for availing of the Exchange Offer were the higher face value of the preferred shares of P75.00 per share versus the market price of the common shares of P51.00 per share when the exchange was first announced.

The preferred shares also promise a higher dividend rate of 8 percent per annum, which translates to P6.00 per share per annum versus the common dividend of P1.40 per share given in the past many years.

SMC also raised P7.3 billion in to finance its diversification plans through the issuance of additional preferred shares via private placement.

The firm said it issued 97.33 million Series "1" Preferred Shares to not more than 19 qualified buyers and by way of private placement at the issue price of P75.00 per share.

SMC said the qualified buyers are Union Bank of the Philippines; UnionBank Trust as Investment Manager for Beneficial PNB Life Insurance Co., Inc.; UnionBank Trust as Trustee for Peter Ng and Josephine Ng Lo; UnionBank as Trustee for UnionBank Retirement Fund; UnionBank as Trustee for First Union Plans (Pension Classic); BDO Capital & Investments Corporation; BDO Private Bank, Inc.; Chinabank Savings for Various Trust Accounts; Chinabank Savings for Various Trust Accounts; Philippine National Reinsurance Corporation; and Standard Chartered Bank.

SMC added that there were also non-qualified buyers, namely: UnionBank Trust as Investment Manager for FLG Management and Development Corporation; BDO Leasing & Finance, Inc.; BDO Strategic Holdings, Inc.; and Equitable Card Network, Inc.

BDO Leasing and Finance Inc. alone subscribed to P1.3 billion worth of the preferred shares. SMC did not disclose the amount subscribed by other units of Banco de Oro which is the banking arm of the SM Group of Companies.

This investment marked the return of the SM group into SMC and comes after the SM group had divested its common shares in SMC at a huge profit.

SMC continues to be on an aggressive diversification and acquisition binge and is eyeing business in the telecommunications, mining, power generation, and water and electricity utility sectors.