PLDT-Lopez alliance clinches control of Meralco's board, management
By Lala Rimando and Judith Balea, abs-cbnNEWS.com and Newsbreak | 05/26/2009 6:41 PM
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MANILA - Like last year, the Meralco Theater was packed with people who were eager to take part in the much-awaited annual stockholders' meeting of the country's largest power distributor.
But contrary to what many were probably expecting, the event ended the same way typical annual meetings do—
without all the grandstanding and drama that transpired during last year's 12-hour long meeting.
The Lopez Group and its white knight Philippine Long Distance Telephone Co. (PLDT) stayed at the helm of Meralco, clinching 6 of 11 board seats, as well as majority of key management positions, thus blocking what was said to be San Miguel Corp.'s attempt to take over.
Their victory was smooth since earlier reports said the Lopez camp had garnered enough shares and proxies to nominate 6 directors, including 1 independent, to the Meralco board as against San Miguel's 5.
The PLDT group, which is chaired by businessman Manuel Pangilinan, owns 30.1 percent of Meralco and the Lopez family owns another 13.4 percent, for a total of 43.5 percent. San Miguel's president and chief executive officer Ramon Ang previously said they hold a 43 percent block together with their own allies.
New board
Manuel Lopez presided over the annual stockholders' meeting. No voting took place since there were only 11 nominees. Since there was no contest on the proxies and the votes of all those present, which cumulutively accounted for 86.93 percent of total outstanding shares, all votes were equally distributed to all the nominees.
The 5 representatives of the PLDT-Lopez alliance to the Meralco board are Manuel M. Lopez, PLDT chair Manuel V. Pangilinan, former public works secretary Jose P. De Jesus, director of PLDT Beneficial Trust Fund Ray C. Espinosa, and PLDT president Napoleon L. Nazareno.
The 4 representatives of San Miguel are Ramon Ang, San Miguel Corp. director Estelito Mendoza, former National Transmission Corp. president Alan Ortiz, and Mario Surio, director of Cyber Bay Corp. where Ang was chairman.
San Miguel chairman Danding Cojuanco Jr. was not nominated to the Meralco board.
The remaining 2 slots were reserved for independent directors: retired chief justice Artemio Panganiban and Vicente Panlilio. Panganiban is widely considered as allied with the Lopez-PLDT team since he also sits as independent director of First Philippine Holdings Corporation (FPHC), the Lopezes' holding company for power-related assets; and Metro Pacific Investment Corp, which is the corporate vehicle for the utilities and real estate investment of PLDT's Hongkong-based parent, First Pacific Co. Ltd.
Panlilio, on the other hand, is expected to vote with the San Miguel group, as his re-election to the Meralco board had the blessings of Government Service Insurance System (GSIS), which sold its 27-percent stake in Meralco to San Miguel. In previous years, Panlilio sat on Meralco's board as a representative of GSIS.
By practice, each of the two major camps float their choice for independent director, who is then approved by the other before formally nominated to the board.
Juicy posts
In the organizational meeting that took place afterwards, the juicy posts in both board and management levels went to the PLDT-Lopez alliance.
Manuel Lopez stayed as chairman and chief executive officer. Other Lopez family members who retained their management posts include Martin Lopez, vice president and chief information officer; and Miguel Lopez, vice president and head of corporate marketing.
PLDT's Pangilinan passed up on management positions but clinched key board committee posts, including the powerful executive committee, which can approve or block decisions of the management team.
PLDT's representatives in the Meralco board also clinched the following board committees: Finance (Espinosa), Compensation & Retirement (Nazareno), and Nomination & Governance (Panganiban). Nazareno sits on almost all the committees.
San Miguel was conspiciously out of the juicy posts. While Ramon Ang was voted vice chairman of the board, he was not in any key board committees. He was just voted as a member of the executive committee.
The audit and compliance committee, however, went to Panlilio.
On the management level, the PLDT's representatives reigned. Jose de Jesus, a Lopez Group executive and former PLDT officer, has been elected as president and chief operating officer. De Jesus was a former public works secretary and he once headed the Lopezes' North Luzon Expressway tollroad business before this was sold to Pangilinan's MPIC.
Uneasy alliance
The new composition of the board of Meralco, where three of the country's most powerful executives have come together, marks another first for Philippine business.
So naturally, analysts said, it is an uneasy alliance.
"This is the first time that these groups have joined together so it will take time to reach that comfort level," said Astro del Castillo, managing director of First Grade Holdings Inc.
"What they need to prove to shareholders is that they can and will make the right investment decisions in the future," he added.
PLDT and San Miguel had bought stakes in Meralco to form synergies, which include piggybacking their own telecoms ventures on Meralco's network of power poles.
Their respective business interests have spawned speculations about an ongoing battle for control, which the two groups repeatedly denied.
Ang said they have no plans to buy more Meralco shares to wrest control of the power utility.
"We are privileged to be a part of Meralco. We are not here to take over. We fully support Manolo Lopez and as long as he stays, our investment in Meralco also stays," Ang remarked.
Pangilinan, on the other hand, disclosed that PLDT and its affiliates are interested in beefing up their ownership of Meralco.
Asked if PLDT was willing to buy the Lopez family's remaining holdings, Pangilinan answered: "Yes, yes."
Earlier, Oscar Lopez, chairman of First Philippine Holdings Corp., Meralco's parent, said they would reduce or sell their Meralco stake if better investment opportunities crop up.
"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," he noted.
In the meantime, he said they are looking forward to their continued participation in Meralco, whose petition for rate increase was recently approved.
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.
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