Lopezes may sell Meralco at the right price, time

MANILA, Philippines - The Lopez group may sell its interest in the Manila Electric Co. (Meralco) at the right price and at the right time, the family’s patriarch hinted, a day before the company holds its annual stockholders’ meeting. “If other opportunities arise that are significantly more attractive than Meralco, then we also have the option to sell down or sell out at significantly higher values than would have been possible if we had opted to engage in a battle of attrition," said Oscar M. Lopez, chairman and chief executive officer of the First Philippine Holdings Corp. (FPHC). He made this announcement during the annual stockholders’ meeting of the FPHC, Meralco’s parent company, held on Monday. During the same meeting, he defended the group’s earlier decision to sell 20 percent of its Meralco stake to the Philippine Long Distance Telephone Co. (PLDT) and Metro Pacific Investments Corp. (MPIC), which are both headed by Manuel V. Pangilinan. The 20 percent stake sale has helped “forge a strategic alliance that will enable us to continue to participate, both as owners and as business partners, in a Meralco whose potential value has been greatly been enhanced by the possibilities of synergy with PLDT," Lopez said. Besides providing Meralco – and its parent – much-needed funds to manage its debts, the transaction has also “liberated" the Lopezes from defending its challenges to their ownership and management. Two years ago, FPHC bought the 9.1 percent Meralco stake held by Spanish company Union Fenosa using debts. The group’s financial obligations increased when it had to cover the 40 percent interest of Icelandic firm Reykjavik Energy Invest, and Spalmare Holdings BV in the joint venture that won the bidding for a substantial interest in PNOC-Energy Development Corp. (EDC). FPHC’s debts have been cut in half with the Meralco stake sale to PLDT, First Holdings president Elpidio Ibanez said. Meanwhile, the transaction reportedly allowed PLDT to fortify its lease agreements with the electricity distributor. PLDT currently rents Meralco posts and its similar structures for cables of its phone and internet business. Meralco, the Philippines’ largest electric company, is set to hold its stockholders’ meeting on Tuesday, an occasion that may give rise to a proxy war similar to the one that occurred exactly one year ago. In 2008, then-substantial shareholder Government Service Insurance System (GSIS) disputed the validity of proxies presented by the Lopezes, a move the pension fund claimed allowed the family to retain Meralco control. The pension fund later sold its 27 percent Meralco stake to San Miguel Corp., a Manila-based food conglomerate seeking to diversify into non-core and higher-yielding businesses such as energy and telecommunications. Lopez credited San Miguel for using “friendlier tactics to win over Meralco." As a result, pundits and market observers alike are looking forward to surprises regarding Tuesday’s stockholders’ meeting. PLDT, together with First Holdings, hold a combined 43.4 percent of Meralco. For his part, SMC president Ramon S. Ang said that the company, with its allies, have a combined 43 percent control. The remaining shares are considered as a “swing vote" for Meralco's ownership. - GMANews.TV