SMC hikes stake in Meralco

Pedestrians walk past a Meralco sign in suburban Manila in this file photo. San Miguel Corp. has increased its stake in the country's largest power distributor to 32.39 percent by taking over a 5.6-percent stake that the Social Security System sold to an affiliate three years ago under an installment plan. AFP PHOTO/JES AZNAR

MANILA, Philippines—San Miguel Corp. has increased its stake in the country’s largest power distributor, Manila Electric Co., to 32.39 percent by taking over a 5.6-percent stake that the state-controlled pension fund Social Security System sold to an affiliate three years ago under an installment plan.

In a disclosure posted on the Philippine Stock Exchange on Wednesday, SMC said that in a special block sale dated June 11, 62.99 million Meralco shares were crossed representing the SSS’ sale of shares to SMC Global Power Holdings Corp. at P90 per share.

With this block transaction worth about P5.7 billion, SMC said it has raised its indirect ownership in Meralco to 32.39 percent.

Industry sources said this was the same block of shares committed by the SSS for sale to Global 5000 Investment Inc., a fund led by businessmen Iñigo Zobel, former Trade Minister Roberto Ongpin and condiments businessman Joselito Campos, who all have interests in the group holding the controlling stake in SMC.

In 2009, SMC bought a 27 percent stake in Meralco from the Government Service Insurance Corp. at a price per share of P90 under a three-year payment installment but voting rights were immediately acquired by the conglomerate. Later that year, Global 5000 came up with a similar deal with other government financial institutions, namely, SSS, Development Bank of the Philippines and Land Bank of the Philippines.

Global 5000 agreed to pay about P10 billion for the combined 10 percent stake in Meralco held by the SSS, DBP and Landbank block in installments until January 2012. The shares were not to be crossed at the Philippine Stock Exchange until full payment but Global 5000 likewise acquired the proxy votes immediately. But Landbank, which owns about 3.8 percent of Meralco, was left out of the deal at that time because Meralco cancelled its shares on the eve of the block sale agreement with the government financial institutions.

SMC thus remains a key voting block in Meralco even as the controlling interest is now held by the First Pacific group led by businessman Manuel Pangilinan through Beacon Asset Holdings. Beacon was created as a joint venture between Metro Pacific Investments Corp. and Philippine Long Distance Telephone Co. subsidiary PLDT Communications and Energy Ventures Inc. (PCEV), formerly known as Pilipino Telephone Corp.

Beacon owns at least 48.02 percent of Meralco but as Beacon and the Lopez groups vote as a bloc in Meralco, Pangilinan’s group effectively controls at least 51.92 percent of vote in Meralco.