SM Corp. restructures to simplify ownership

SM Investments Corp. said it will create subsidiaries and affiliates as part of a ownership restructuring plan that will simplify its corporate structure. In a statement, SM Investments said it approved the plan aimed at realigning the ownership of shares and properties within SM to “follow major business lines, namely retail merchandising, mall operations, the banking and financial services, real estate and private investments.�?

“Once completed, SM will be able to unlock its corporate value and become even more transparent to the investing public. It will also help investment analysts forecast the company's future earnings and place a realistic value on its assets. Funding options for future projects will likewise broaden as the specific lines of business can then tap specialized investment funds that match their specific areas of interest,�? SM Investments said.

Harley Sy, SM president, said two new SM companies, SM Retail Inc. and SM Land Inc., would be formed within this year.

“This signals our intent to put priority on increased transparency as one of our primary responsibilities to our minority shareholders,�? Sy said.

SM's retail operations will be under SM Retail Inc., which will also manage SM Department Stores, SM Supermarkets, and the SM Hypermarkets. This sector currently generates over 70 percent of SM's total revenues.

On the other hand, SM Land will be created to manage real state projects.

“This new and the emerging business for SM will hold various assets in real-estate projects, subsidiaries and affiliates of SM in residential, commercial and ecotourism-related development,�? the company said.

Meanwhile, SM Prime Holdings, which has been listed since 1994 will continue to be the sole mall operator of the group. The mall operator accounted for 18 percent of SM's revenues in 2005, and 53 percent of SM's profits.

SM Prime said it still has huge inventory of undeveloped lands where its malls are located that could still be developed in the future.

While other members of the group is being realigned, its banks, Banco de Oro and China Banking Corp., will continue to operate independently, the company said.

Last year its banks contributed 5 percent to SM's revenues and 22 percent to its net income.

Thursday, August 10, 2006