SSS eyes sale of Philex stake in 2010

By Judith Balea,

Posted at Aug 22 2009 04:08 PM | Updated as of Aug 27 2009 06:50 AM

HONG KONG - The 22% stake of state-run Social Security System (SSS) in copper-gold producer Philex Mining Corp. is not up for sale until next year.

In an interview, First Pacific Co. Ltd. managing director and Metro Pacific Investments Corp. chairman Manuel V. Pangilinan said they have offered to buy out the SSS from Philex but the pension fund's president Romulo Neri refused, saying they intend to sell next year.

"I was able to talk to Romulo Neri and he said they are not [selling] now but maybe next year. So we backed off," Pangilinan said.

First Pacific of Hong Kong owns a stake of 22% in the mining firm and wants to raise this substantially to 51%. However, it is encountering some problems.

For one, Pangilinan said they could no longer locate 20-30% of Philex's shareholders so First Pacific could not buy them out.

He said an option is to sell more shares via a rights offer so they could increase their stake by snapping up shares unsubscribed by missing shareholders. But other stockholders may not be willing to undertake such offer because it would require them to shell out additional funds to prevent their stakes from getting diluted.

Pangilinan said it is also difficult to determine the true value of Philex shares at this point since the company's mining and oil exploration activities are still in the early stages. Pangilinan added that a big uncertainty hangs over the size and quality of the deposits in Philex's Boyongan mine.

"The oil and gas business of Philex is more speculative. If initial indications are real, it's going to be a huge oil company. If that is so, it's (Philex) worth more than P10 [per share]."

Earlier, the SSS said it would only sell its holdings in Philex at the right price.

San Miguel Corp. president Ramon Ang is also reportedly eyeing the pension fund's stake in Philex, triggering speculations over a possible bidding war for the mining interest.