Meralco share trading resumes as utility meets conditions

MANILA, Philippines - Shares of Manila Electric Co. (Meralco) will be traded again today after the Philippine Stock Exchange (PSE) segregated disputed stocks of the Lopez-led utility. The bourse lifted the suspension on the trading of Meralco shares after the country’s largest power distributor met five requirements set earlier. "The PSE worked to ensure that none of the untraded Meralco shares under dispute between Land Bank of the Philippines (Landbank) and Josefina S. Lubrica will be sold in the stock market," PSE President and Chief Executive Officer Francis Ed. Lim said Monday. He added that the parties had exerted efforts to isolate the contested shares, completing the "purification process" to protect investors. One of the conditions was for Meralco to honor the title and rights of the buyers of 3.37 million Lubrica shares that had been traded and settled. It should not, however, authorize the lodging into the depository of any of the 1.4 million unlodged, disputed shares. The Lopez-led company was also asked to indemnify the stock exchange, the Securities Clearing Corporation of the Philippines, and Philippine Depository and Trust Co. for any losses, damages, claims or liabilities that any of them might sustain in connection with the disputed shares, including those that had been traded and settled, quarantined, and traded but still unsettled. "I am sure this will be a big relief most especially to Meralco’s many shareholders. We also hope that this will result in normal trading of Meralco shares," Anthony Rosete, Meralco’s legal and disclosure office chief, said in a statement. He added that the suspension had caused anxiety among Meralco shareholders who had not been involved in the dispute. But Claire S. Quiray of Accord Capital Equities Corp. said investors were more likely to dump their Meralco shares today. "Meralco shares will more likely decline because it needs to absorb the market’s decline for the past trading sessions," she said in an interview. "Also, investors who got stuck when the trading was suspended last Dec. 17 would more likely try to get out, avoiding problems that could arise again," she added. Ms. Quiray said Meralco’s saving grace would be Wall Street, which she said could limit the utility’s drop if the US market managed to close favorably last night. Shares of Meralco closed P59.50 apiece before the trading suspension. On Dec. 17, the PSE halted the trading of Meralco shares after the Lopez-led utility canceled about 42 million shares held by the Landbank in favor of Ms. Lubrica, nearly depleting the bank’s holdings in the country’s biggest electricity distributor. Ms. Lubrica was the winner in a 2005 auction where Landbank’s Meralco shares had been sold after the bank failed to pay a landowner she had represented and who had been stripped of ownership under the Agrarian Reform Law. Landbank cried foul over the cancelation of its stock certificates without prior notice from the Meralco management. The Lopez company, however, has cited a Supreme Court ruling handed down in July last year that upheld the auction, noting that Landbank had failed to settle the payment on time. Meralco earlier appealed to the PSE to lift the suspension, saying the dispute with Landbank only involved 42 million out of the company’s 1.1 billion shares. It also said other shareholders not involved in the dispute had been affected by the trading halt. Also Monday, the PSE ordered the resumption of trading of shares of IPVG Corp. The local information technology firm voluntarily halted the trading of its stocks last year, pending negotiations on its acquisition of 3D animation firm Lucid Multimedia Tech, Inc. "In view of the fact that [IPVG] failed to sufficiently justify the continued voluntary trading suspension, the exchange resolved to lift the trading suspension on Monday, Jan. 26," the bourse said. Shares of IPVG closed at P1.20 apiece prior to the voluntary suspension. - BusinessWorld