Razon offers to buy public's share in Manila Water

Casino and ports magnate Enrique Razon is not yet done in securing further control of Manila Water as he offered to buy the listed water concessionaire’s shares held by the investing public.

In a disclosure to the Philippine Stock Exchange on Friday, Manila Water Co. Inc. says it has received a letter from Razon’s Prime Metroline Holdings Inc. announcing its intention to make a mandatory tender offer for the shares of the water firm.

Prime Metroline set the tender offer price at P13.00 apiece, lower than Manila Water’s closing price on Thursday at P14.96 per share.

A tender offer is a public bid to takeover all or some of the shares in a corporation.

Manila Water currently has a public float level or the percentage of the company owned by the public at 55.89% with a market capitalization of P30.89 billion.

The announcement of tender offer came after Ayala Corp., the parent firm of Manila Water, announced that its executive committee has approved the grant of proxy rights by its wholly-owned unit Philwater Holdings Co. to Trident Water “to enable the latter to achieve 51% voting interest in Manila Water.” 

Trident Water is the company incorporated by Prime Metroline to consummate its purchase of 25% stake in Manila Water, infusing P10.7 billion in fresh capital for the embattled water distribution utility. 

Razon’s - the fourth richest man in the Philippines - fresh capital infusion to Manila Water came amidst the ongoing discussions between the government and water concessionaires to craft a new concession agreement, which were earlier deemed by Philippine officials as “onerous.”

Early last month, President Rodrigo Duterte has offered water firms Maynilad and Manila Water new concession agreements that do not contain provisions allegedly disadvantageous to the government and the public.

The decades-old concession deal between the government and water firm went under scrutiny after both Manila Water and Maynilad scored victory in separate multi-billion peso arbitration cases abroad.

Permanent Court of Arbitration in Singapore has ordered the Philippine government to pay Maynilad around P3.4 billion and Manila Water P7.39 billion as compensation for losses or damages as spelled out under the liability clause.

Duterte, however, railed against the agreements which prohibit any government interference in rate-setting and provide an indemnity clause in case of such interference.

But the companies said last December that they were no longer pursuing the awards and that they would coordinate with the government to review provisions in the agreements that the government considered disadvantageous to its interests and the consumers.

The government also questioned the extension of concession agreements until 2037, way before the existing contracts were supposed to expire in 2022.

The Metropolitan Waterworks and Sewerage System (MWSS) has canceled the extension of concession deals to 2037.  —KBK, GMA News