Lopezes willing to sell Meralco but at the right price, analyst says

MANILA, Philippines - The Lopez group is willing to sell its controlling stake in Meralco, the Philippines’ largest electric company, but only at the right price, a stock analyst told GMANews.TV. Peter Lee, who works for a brokerage that trades in Meralco shares, said Oscar M. Lopez’s “willingness to sell" his family’s 33.4 stake in Meralco to a state-run pension fund was announced “to support its share prices." Lopez is the chairman of First Philippine Holdings, the parent company of Lopez-controlled Meralco. The Lopez family “might be willing to sell at the right price and it doesn’t necessarily mean at current prices," said Peter Lee, an analyst at Makati-based IGC Securities Inc., referring to stock, which has fallen after increasing public clamor against high power prices. Shares of Meralco fell to P67.50 from P70.00 during Thursday’s trading at the Philippine Stock Exchange (PSE). Besides being the second-most actively traded during Thursday’s session, next to market barometer PLDT, the stock reached a high of P116.00 for the past year. The Lopez family’s holdings in the P78.03 billion company—worth approximately P26 billion as of Thursday’s trading at the Philippine Stock Exchange (PSE)—may be sold to the Government Service Insurance System (GSIS) or even to a foreign investor but at a 20 percent premium, at least. GSIS, a state-controlled pension fund for government employees, holds 33 percent of Meralco, which is also Metro Manila’s lone electricity distributor. Winston Garcia, GSIS President and general manager, said he was “ready" to acquire the Lopez family’s stake in a bid to minimize the impact of high power costs on consumers. “If the government wants to buy the stake, it has to bid up, which will stabilize prices," Lee said, expressing confidence that share prices may climb within the next trading days since the stock is already considered “cheap." For his part, Jason Lagrimas, an analyst for 2Trade Asia, recognized "a bit of selling pressure" on Meralco stock. Meralco’s stock prices “has been down for the past two days because a lot of people are hesitant about the government retaining control of a private company," Lagrimas said in an interview. “It’s not that the company is a bad company," Lagrimas added. “It’s that the government should investors proof that it will do a better job than current management." Moreover, Lee said that the Lopezes intends to increase its stake because of the company’s earnings prospects. The Lopezes “want to buy the government stake" because it is expected to double its profit once the Energy Regulatory Commission (ERC) allows it to charge higher rates. Recently, Meralco secured approval to alter how much to charge consumers for its investments in and maintenance of its power assets, such as wires and electric posts. Called PBR—performance-based ratings—the new formula is expected further increase power prices levied on its customers. However, the ERC has delayed the new rate’s implementation. Previously, the company—through a computation called the return on rate base—was only allowed to impose 12 percent on its capital investments. GMANews.TV is the official website of GMA News and Public Affairs, a unit of GMA Network Inc. GMA Network is a competitor of the Lopez-owned ABS-CBN Broadcasting Corp. - GMANews.TV