Wednesday, 31 March 2010

First Pac now owns 41% of Meralco

Miguel Camus
Business Mirror

HONG KONG-based First Pacific Co. Ltd., led by businessman Manuel Pangilinan, completed on Tuesday the acquisition of a P22.4-billion stake in the Manila Electric Co. (Meralco) almost five months after securing the shares from Lopez-led First Philippines Holdings Corp. (FPHC).

The shares, equivalent to a strategic 6.6 percent of the country’s largest electricity distributor, will likewise hike the group’s ownership in Meralco to more than 41 percent.

Pangilinan-led Metro Pacific Investments Corp. (MPIC) originally secured the stake on November 5 last year at P300 apiece, a significant premium at the time, to prevent it from being acquired by rival bidder TriRatna Holdings Corp., controlled by Henry Sy Jr.

MPIC is the local flagship of First Pacific, which is also part owner of telecommunications giant Philippine Long Distance Telephone Co. (PLDT).

The newly acquired stake, along with another 14.5 percent held by MPIC, has already been transferred to newly established holding firm Beacon Electric Asset Holdings Inc., which now owns about a fifth of Meralco.

The shares were crossed on Tuesday on the Philippine Stock Exchange.

As part of the plan, Beacon Electric’s Meralo ownership will be increased to 34.8 percent, or just shy of the tender- offer threshold, when PLDT unit Pilipino Telephone Corp. (Piltel) transfers a 13.7- percent Meralco stake  expected in May this year.

Beacon Electric will then be equally owned by MPIC and Piltel. The latter will continue to directly hold about 6 percent of Meralco.

This will also make Beacon Electric Meralco’s single-largest shareholder as rival San Miguel Corp., which is also diversifying into infrastructure and power, directly owns about 27 percent.

The consolidation of shares under one company will allow the holding firm to access debt financing for any potential Meralco purchases in the future, using its own shares in the power retailer as collateral.

To fund the additional Meralco a quisition, Beacon Electric has entered into a term sheet with a syndicate of banks which will agree to advance up to P18 billion for a term of 10 years.

MPIC also completed  on Tuesday its issuance of P6.6 billion worth of convertible bonds to local parent Metro Pacific Holdings Inc. for three years at a conversion price of P3.25.

Shares of MPIC rose 3.33 percent to P3.10 apiece on Tuesday’s close.

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