San Miguel buys 35% in tollway venture

DIVERSIFYING FOOD and beverage giant San Miguel Corp. has solidified its intent to become a major player in the infrastructure sector by acquiring a significant stake in a consortium that will construct the 88-kilometer Tarlac-Pangasinan-La Union expressway project.

San Miguel, through subsidiary Rapid Thoroughfares, Inc., signed a subscription agreement for a 35% stake in Private Infrastructure Development Corp.

The move sealed the non-binding agreement San Miguel signed with the company in July, and marked the conglomerate’s entry in the infrastructure business after investing in heavier industries like power distribution and oil refinery last year.

"The agreement is the most recent step in the company’s strategic transformation to diversify from its core food, beverage and packaging portfolio and marks its entry into infrastructure and tollways," San Miguel said.

Private Infra had said it hopes to start the construction of the tollway on September or October from original date of April, and finish the project in 2014. Depending on how things work out, San Miguel plans to increase its stake to a controlling interest of 51%.

Private Infra has filed an application with the Securities and Exchange Commission to reclassify P1 billion in preferred to common shares. The all-Filipino company also plans to increase its authorized capital stock to P4.5 billion and further increase this to P6.5 billion next month.

The P18-billion road network is expected to cut travel time from Manila to Baguio by half.

San Miguel has other infrastructure projects in mind. Earlier, the conglomerate disclosed plans to build a tollway that will connect Nueva Ecija to Cagayan Valley Road and together with Private Infra, a road from Rosario, La Union to Laoag. San Miguel has also expressed interest to acquire a stake in the operations of the Subic-Clark-Tarlac Expressway from the state-led Bases Conversion Development Authority.

In July, San Miguel President Ramon S. Ang said the investment in Private Infra was in line with diversification plans, and "we’re happy to be a catalyst for the infrastructure needs of the country."

Mr. Ang noted that the northern and central Luzon stretch is a potentially dynamic industrial corridor and the proposed expressway would make it easier and cheaper to move goods and people from one point of Luzon to another.

"As a food and beverage conglomerate with one of the most developed distribution networks in the country, we have a strong interest in making it happen," Mr. Ang said.

Since announcing plans to venture outside its traditional food and beverage businesses, San Miguel has already bought significant stakes in various companies, which include the Bank of Commerce, Manila Electric Co., and Petron Corp.

San Miguel on Wednesday entered the power generation business after winning the 620-megawatt Limay Combined Cycle Power plant in Bataan through a negotiated sale with the Power Sector Assets and Liabilities Management Corp. The group had offered $13.5 million for the plant.

The conglomerate is also the sole bidder for the Laiban Dam project of the Metropolitan Waterworks and Sewerage System.

Shares in San Miguel did not move at P65 apiece yesterday. — Kristine Jane R. Liu - Business World

San Miguel willing to buy majority stake in Subic-Clark expressway ‘if available’

AFTER DIPPING its hands into power, oil, telecommunication, and banks, food and beverage giant San Miguel Corp. is eager to add infrastructure in its diversified portfolio.

"Yes, if available," San Miguel President Ramon S. Ang said when asked if his firm was interested to acquire a majority stake in the government-owned tollway from Subic to Tarlac.

On Wednesday, San Miguel joined Metro Pacific Tollways Corp. in expressing interest to acquire a stake in the Subic-Clark Tarlac Expressway from the Bases Conversion Development Authority (BCDA).

The BCDA however has denied receiving any proposal, adding that it has yet to finish the terms of reference that will allow the agency to give the winning bidder a long-term contract to operate and maintain the expressway. The four-lane divided highway is expected to spur development in Central Luzon by connecting the Subic Freeport and Special Economic Zone, the Clark Freeport and Special Economic Zone, and the Central Techno Park in Tarlac.

The Subic to Clark portion spans 50.5 kilometers. Metro Pacific, which holds other infrastructure investments, operates the expressway on an interim basis.

San Miguel has been in acquisition mode following its announcement two years ago of a plan to venture outside its core businesses. It has acquired stakes in Manila Electric Co., Petron Corp., and Liberty Telecom Holdings, Inc. among others. — K. J. R. Liu - BusinessWorld