Ayala unloads remaining Manila Water stakes to Razon for P14.5 billion

Conglomerate Ayala Corporation is divesting all its remaining stakes in east zone concessionaire Manila Water Company Inc. to ports and casino magnate Enrique Razon Jr. for P14.5 billion.

In a Friday Philippine Stock Exchange (PSE) disclosure, Ayala said its wholly owned subsidiary, Michigan Holdings Inc., executed special block sales covering Michigan’s 577,997,467 common shares in Manila Water with  Razon’s Trident Water Company Holdings Inc.

Moreover, the conglomerate said its other wholly-owned unit, Philwater Holdings Company Inc., was also executing a deed of absolute sale with Trident for the offloading of its 872,487,863 Manila Water preferred shares.

The gross consideration for the transactions with Trident stands at P14.5 billion, according to Ayala.

For the special block sales of Michigan’s Manila Water common shares to Trident, the transaction was completed -after approval by the PSE- through a cash settlement of P12.9 billion.

For Philwater’s sales of its Manila Water preferred shares to Trident, the transaction would be completed in installment payments of P1.6 billion spread over 2024 to 2029.

The conglomerate said it will “no longer hold common shares of Manila Water and its voting stakes will be nil (0%) as a result of the block sale.”

As to Philwater's sale of its Manila Water preferred shares, Ayala said a voting proxy would be issued in favor of Trident for its acquisition of Manila Water’s preferred shares.

With this, the conglomerate said it would retain an effective 12.08% economic stake in Manila Water through the preferred shares but once it has been fully paid for in 2029, its economic stake will drop to zero.

Ayala said the transactions were aligned with its portfolio rationalization strategy. Proceeds of the transactions will be used to pare down debt and/or fund future investments.

In a separate news release, Razon’s  infrastructure arm Prime Infrastructure Capital Inc. said Trident’s  acquisition of Ayala’s remaining stakes in Manila Water will result in Trident holding 81.9% voting stake and 62.2% economic interest — “the remainder to vest upon completion of payments.”

Trident Water is a unit of Prime Infra, which now holds full control of Manila Water.

In February 2020, Ayala granted a 51% voting interest in Manila Water to Razon-led Trident Water through a subscription of 820 million common shares of stock from the unissued authorized capital stock of the water distribution utility. 

Moreover, Manila Water’s subsidiary, Philwater Holdings Co., granted a proxy in favor of Trident Water over the seller’s preferred shares to allow the latter to achieve a 51% voting interest in Manila Water.

Razon’s Prime Metroline Holdings Inc. previously purchased a 25% stake in the water distributor, infusing P10.7 billion in Manila Water’s capital spending program for an improved water and wastewater distribution system in Metro Manila’s east zone concession.

Prime Metroline incorporated Trident for the transaction.

Manila Water, the acquired entity, is a publicly listed company holding the exclusive right to provide water services, particularly water treatment, water distribution, sewerage, and sanitation services, to the eastern zone of Metro Manila via a concession agreement with the Metropolitan Waterworks and Sewerage System (MWSS). 

“Manila Water continues to deliver reliable and efficient water and wastewater services to communities in key metros in the Philippines and abroad. We look forward to the company’s future as we continue optimizing the business and expanding both our domestic and international operations,"  said Razon.

Prime Infrastructure said Manila Water will continue to leverage its expertise and track record in business development, project delivery, and operation of long-term assets in highly regulated industries and complex geographies. — DVM, GMA Integrated News