ABS-CBN News Online Beta

Lopez group may sell remaining Meralco stake

---

by Judith Balea, abs-cbnNEWS.com | 05/25/2009 8:57 PM

Printer-friendly version | Send to friend | Share your views

• 
• 
• 
• 
• 
• 
• 

Lopez-controlled First Philippine Holdings Corp. (FPHC) may reduce or sell its 13.4 percent stake in power distributor Manila Electric Company (Meralco) if there are better investment opportunities.

"If other opportunities arise that are significantly more attractive than Meralco, then we have the option to sell down or sell out at significantly higher values," Oscar Lopez, FPHC chairman and patriarch of the Lopez Group, said in a speech during the power and infrastructure conglomerate's annual stockholders' meeting on Monday.

Lopez said that in the meantime, they are looking forward to their continued participation in Meralco where they stand to realize more value because of synergistic opportunities that the alliance with the Manuel Pangilinan-led Philippine Long Distance Telephone Co. (PLDT) has offered.

The Lopez family used to own 33.4 percent of Meralco until it sold 20 percent to PLDT for P20.1 billion last March.

"Although our stake is much reduced, it is now potentially part of a greater and bigger story. For us, it is more than a matter of sentiment or symbolism; it is about creating and enhancing value at Meralco," Lopez stressed.

At the sidelines of FPHC's annual meeting, meanwhile, its president Elpidio Ibañez echoed Lopez's remarks, saying they are open to selling a portion of or their whole stake in Meralco, but he noted this was unlikely to happen within the year.

He said the recent approval of Meralco's petition for rate increase as well as PLDT's plans for the power utility would give any potential stake sale a significant upside.

"We'd like to hold on first to our Meralco stake. There can be an upside to its value," Ibañez noted.

FPHC's interest in Meralco is now down to about 150 million shares, currently valued at P16 billion, based on the company's close of P106 per share at the stock market Monday.

If the company decides to dispose of its equity in the power firm, this has to be offered first to the PLDT Group, which gained the right of first refusal after it bought 20 percent of the Lopezes' stake.

PLDT now owns 30.17 percent of Meralco while another major shareholder, diversified conglomerate San Miguel Corp., and its allies hold another 43 percent. With the Lopezes' remaining 13.4 percent, a little over 13 percent is held by public investors.

Meralco is set to hold its annual stockholders' meeting on Tuesday where its 11-man board will be elected. Based on the board nominees, the PLDT-Lopez alliance has the upper hand, with 5 nominees compared to San Miguel's 4. The other 2 seats will be occupied by independent directors.

Meralco proceeds to reduce debt

Meanwhile, FPHC will receive the proceeds from the Meralco stake sale in July. Ibañez said these would be partly used to pare down FPHC's debts from the current $440 million to about $200 million.

According to him, they have no immediate plans to raise additional funds for debt servicing, but they would like to get ready with the liquidity they need if new investment opportunities related to their current businesses crop up.

Aside from power distribution, FPHC is also engaged in power generation, real estate and construction. It also has a solar panel manufacturing joint venture with Sunpower Philippines Manufacturing Ltd.

Ibañez said they have been invited by Sunpower to participate in a newer and larger plant that it is developing in Malaysia.

"Sunpower wants to retain a 20 percent equity in the possible joint venture and it's up to us to put in the remaining 80 percent. We're looking to invite investors to join us also, so FPHC will retain 51 percent," he said.

abs-cbnNEWS.com is the online news department of ABS-CBN Interactive Inc., a subsidiary of ABS-CBN Broadcasting Corp., part of the Lopez group of companies