Metro Pacific, Piltel to form holding firm for Meralco shares

Metro Pacific Investments Corporation (MPIC) and Pilipino Telephone Corp. (Piltel) are in talks to form a company that will hold their combined shareholdings in Manila Electric Co. (Meralco). "The terms of the reorganization are being finalized by MPIC and Piltel and an announcement in this regard will be made shortly," MPIC told the Philippine Stock Exchange (PSE) on Monday. The parties, it added, were still finalizing the documentation and were obtaining the necessary consent. Piltel confirmed the plan in a separate disclosure to the bourse. Businessman Manuel V. Pangilinan earlier rejected rumors that the listed holding firm he heads is in short supply of funds to increase its ownership in Meralco, saying money is available for an additional 6.6 percent of the country's largest power distribution utility. MPIC will buy the stake, to be provided by Meralco shareholder First Philippine Holdings Corp. of the Lopez family under a deal late last year, he said. Both camps have twice extended the signing of the so-called call option deal, which allows Metro Pacific and allied firms to hike their interest in Meralco to 41.4 percent. "Funding for these 6.6 percent Meralco Shares have been agreed with a syndicate of banks and with First Pacific Company Limited, MPIC's principal shareholder, subject to the requisite board approvals and documentation," MPIC told the exchange. In the meantime, it added, the so-called standstill deal with the Lopez group would stabilize the ownership of Meralco. Under the deal, the Lopez group agreed not to sell for three years Meralco common stocks except to MPIC. Metro Pacific is entering power generation by bidding for the state's Angat hydroelectric plant along with Ayala Corp. The Lopezes first sold a 20-percent stake in Meralco to the PLDT group in March 2009, raising P20 billion to retire mounting debt incurred in their foray into power generation, particularly geothermal energy. Firms allied with Metro Pacific later obtained an additional 14.7-percent stake from the open market, sending Meralco share prices skyrocketing. An alliance with the Lopezes fended off a takeover attempt last year by diversifying food and beverage conglomerate San Miguel Corp., which has a 27-percent stake but claims to be able to muster 43 percent. Last November, the power struggle took another twist when the son of mall tycoon Henry Sy, the country's richest man, offered to buy half of the Lopezes' remaining 13.4 percent Meralco stake for P300 apiece. Pangilinan's group, which had the right of first refusal, matched the offer under complicated terms — Metro Pacific first extended an P11.2-billion loan to the Lopezes in November, and then would be given a call option to expire on March 31, 2010 over the 6.6 percent stake for P22.4 billion. The latest deal will allow the Metro Pacific-PLDT bloc to hike its interest in Meralco to 41.4 percent from 34.7 percent. The Lopezes will reduce their stake to 6.7 percent from 13.4 percent. First Holdings and MPIC were supposed to wrap up the deal last Jan. 15 but moved it to Jan. 29 and then to Feb. 28. No explanation was given for the extensions, fueling market talk that funding is an issue. Metro Pacific is the Philippine unit of Hong Kong's First Pacific Co. Ltd., which partly owns Philippine Long Distance Telephone Co. (PLDT). Piltel provides a prepaid mobile service known as Talk ‘N Text, using the platform of PLDT unit Smart Communications, Inc. — NPA, GMANews.TV