San Miguel Corp. (SMC), the largest Philippine company by sales, may buy back its shares after a newspaper report sank the stock to its lowest level since October 2010, President Ramon Ang said.
San Miguel shares had fallen 6.9 percent at the noon break in trading in Manila today, heading for their lowest close since Oct. 22, 2010. The shares pared losses after Ang’s comments and were trading 2.1 percent lower at 82 pesos as of 1.48 p.m. in Manila.
Ang said the slump was triggered by a Manila Times article on July 14 that said the International Monetary Fund had warned the government that the economy faces a risk that a “highly leveraged conglomerate,” or one part of it, could default on its debt. Neither the newspaper nor the IMF report it cited identified a particular company.
The article “frightened the investing public,” Ang said today in an interview in his office in Manila.
“I will go to the board to protect the investing public,” he said. “At worst, we can buy back all the stocks and make the company private.”
“Investors are speculating San Miguel is the conglomerate being referred to because most of the attributions being stated in the report fit the company,” Astro Del Castillo, managing director at First Grade Finance Inc., said.
Manila-based San Miguel is in “a very healthy financial position,” Ang said, adding that its debt is below lenders’ covenants.
San Miguel’s consolidated net debt was at 239.27 billion pesos ($5.52 billion) at the end of March, and at a ratio of 3.1 against 12-month earnings before interest, taxes, depreciation and amortization, below a multiple of 5 allowed under an agreement with creditors, he said.