Friday, 6 November 2009

MVP buys 6.7% more of Meralco

By Zinnia Dela Peña
The Philippine Star

MANILA, Philippines - The Lopez family will hand over half of its remaining stake in Manila Electric Co. (Meralco) to the PLDT Group of Manuel V. Pangilinan, a move that will put the telecom magnate on the threshold of acquiring control of the country’s biggest power distributor.

Through First Philippine Holdings Corp.(FPHC), the Lopez family still has a 13.4-percent stake in Meralco. A bigger 20-percent block was sold earlier this year to the PLDT Group and is now held by Pilipino Telephone Co. (Piltel).

Following FPHC’sboard meeting yesterday, company president Elpidio Ibañez said the board granted Metro Pacific Investments Corp. (MPIC) – First Pacific’s local unit - a call option on 74.7 million common shares or approximately 6.7 percent of the outstanding capital of Meralco.

The deal effectively thwarted an offer made last week by Triratna Holdings Corp. led by Henry Sy Jr. – the eldest son and namesake of the country’s richest man - who offered to buy the entire 13.4 percent holdings for P300 a share or a total purchase price of P44.75 billion.

The Pangilinan-led group, under the banner of the Hong Kong-based conglomerate First Pacific, has the right of first refusal on the contested stocks and decided to exercise this option by matching the offer price put forward by the Sy-led company.

A call option is a financial contract between a buyer and a seller, wherein the buyer has the option to buy stocks at a specified time in the future.

Ibañez said the company decided to keep half of their shareholdings in Meralco to maintain a strategic presence in the country’s largest power distributor. “If you notice, all throughout the discussions, we were really just interested in selling half of our stake for now,” he said.

Ibañez said the call option is excercisable at any time from the date the call option is granted until March 31, 2010.

Analysts said the call option was intended to give MPIC more time to raise funds for the purchase of additional shares in Meralco.

Also part of the deal was a short-term loan to be extended by MPIC to FPHC amounting to P11.2 billion, or half of the 6.7 percent stake to be sold to the Pangilinan-led group.

Ibañez said the loan will reflect in a promissory note which will mature on March 31, 2010 and will have an interest of five percent per annum. The loan will be secured by shares of Meralco and First Gen Corp., a unit of FPHC.

Lopez patriarch Oscar Lopez, FPHC chairman and chief executive officer, said: “We are very happy with the agreement reached with Mr. Pangilinan’s group. It reflects a valuation that shows the strong growth prospects of Meralco. The proceeds no doubt will allow FPHC to pursue its new directions and further establish itself in the country as the premier renewable energy provider.”

Ibañez, however, noted that no sale has yet been consummated as MPIC has been given until March next year to decide on it.

He said FPHC intends to use proceeds from the sale to pay debt and infuse an additional P10 billion into First Gen. Around $20 million has also been allotted for First Philec Solar Corp.

Ibañez said the sale, when completed, will leave the Lopez family with just one board seat from the existing two seats they own.

He pointed out that the decision to sell to the Pangilinan group was unanimous. FPHC director and Meralco chairman Manolo Lopez did not join the meeting as he was abroad.

Sy, the president of Triratna, said their offer reflects the group’s “confidence in the future prospects of the power sector in general and Meralco in particular.”

But Sy, son of retail tycoon Henry Sy Sr. of the SM Group, is widely perceived to be an ally of diversifying food and beverage conglomerate San Miguel Corp., which earlier signified its intention to acquire the Lopezes’ shareholdings in Meralco.

Triratna was among those pre-qualified to bid for the 25-year concession of power grid operator National Transmission Corp.(TransCo) in 2006. Aside from the Sy family, the other major shareholders of the private firm during the time were San Miguel Corp. president Ramon S. Ang, Joselito Campos of Unilab and foreign partners Newbridge of the US and Tenaga National Bhd. of Malaysia.

The younger Sy, however, distanced himself from the San Miguel Group, saying Triratna will be majority owned by him after it completes the buyout of its original partners.

The Pangilinan-led group, which has the right of first refusal on the contested block, currently holds 34.7 percent of the power utility giant through Piltel’s 20 percent stake and infrastructure holding firm MPIC’s 14.7 percent.

The PLDT Group’s decision to exercise its right of first refusal would subsequently trigger a mandatory tender offer to the other shareholders.

Under the Securities and Exchange Commission’s tender offer rule, an entity that acquires 35 percent of a listed company must buy the remaining shares held by minority shareholders at the same price.

San Miguel, which has been diversifying from the food and beverage markets to power, toll roads, and telecommunications, owns 27 percent of Meralco. Together with ally Global 5000 Investments Inc., the San Miguel Group holds a total of 34 percent in the utility giant.

No comments:

Post a Comment