Gov't closes $447-M sale of water firm Maynilad

The government on Wednesday completed the sale of Maynilad Water Services for $447.23 million to a consortium that includes DM Consunji Holdings Inc. (DMCI) and Metro Pacific Investments Corp. (MPIC). The new owners vowed better service and a quick exit from financial rehabilitation. The consortium – DMCI MPIC Water Company – acquired the government's 84 percent stake in Maynilad. It beat the $399-million offer of a group led by Ayala-owned Manila Water Inc., which already operates one of two water distribution zones in Metro Manila. Officials of the consortium said they hope to get the water concessionaire out of financial rehabilitation this year, far ahead of the 2013 schedule. "We want to get the company out of rehabilitation within the first year," said Metro Pacific president Jose K. Lim, who added that the company is planning several "impact projects" for the year. To get the company out of rehabilitation, the new shareholders need to wipe out $240 million in debts Maynilad owes its creditors and the Metropolitan Waterworks and Sewerage System (MWSS). Maynilad provides water services in Caloocan, Manila, parts of Quezon City, Pasay, Valenzuela, Paranaque, Muntinlupa, Malabon, Navotas, Las Piñas, and areas in Cavite. Metro Manila’s water distribution system was privatized in 1995. Lopez-owned Maynilad took over in the east zone, Manila Water in the west zone. The new owners vowed to improve service to some seven million consumers. "We would like to reach out to the employees and the customers. We will focus heavily on customer service," Metro Pacific Group chairman Manuel Pangilinan said in ceremonies marking completion of the sale. "We think we will be able to do a lot more and a lot better than the east zone concessionaire," said DMCI president Isidro Consunji. With the signing of the closing certificate, the DMCI-Metro Pacific group also turned over a total of $503 million to state-owned Metropolitan Waterworks and Sewerage System (MWSS). The amount includes group's bid offer of $447.23 million and the minimum bid requirement of $56 million. The funds have been placed in escrow with the Land Bank of the Philippines. Pangilinan said there won't be immediate changes in management even as senior executives of Maynilad have already submitted courtesy resignations. "In the near term, there won't be changes. The reorganization will be done over the next six months," he said. He also said they have already started meeting with management to familiarize with day-to-day operations. Maynilad was placed under rehabilitation in 2005 after suffering huge financial losses under the management of Benpres Holdings Inc. and its partner, the Suez Group of France. In 2005, Maynilad reported a net income of P1.4 billion, marking the first time the water utility firm posted an income after years of financial losses. Metro Pacific’s Pangilinan said the challenge for the group was to sustain Maynilad's fiscal health. "The 2006 figures also look better than expected so the challenge is to continue to improve Maynilad's finances," he said. -GMANews.TV