QUELLING FEARS THAT IT MAY BACK out of the expensive purchase of a chunk of Manila Electric Co. (Meralco), the Manuel Pangilinan group on Monday is currently in talks with local banks to raise money for the acquisition of the controversial block of shares, the company said in its disclosure.

Also, Pilipino Telephone Corp. (Piltel) said it was in talks with sister firm Metro Pacific Investments Corp. (MPIC) for the formation of a new holding company which would consolidate the group?s hold on Meralco.

MPIC and Piltel, which have a combined 34.7-percent stake in Meralco, had earlier agreed to buy another 6.6 percent of the power distributor from the Lopez-led First Pacific Holdings Corp. via a call option that expires on Feb. 28.

?Funding for these 6.6 percent Meralco shares have been agreed with a syndicate of banks and with [Hong Kong-based] First Pacific Co. Ltd., MPIC?s principal shareholder, subject to the requisite board approvals and documentation,? MPIC said in a disclosure.

This will enable MPIC to fund the acquisition of the 6.6-percent Meralco stake should it decide to exercise the call option, the company said.

Under the call option agreement, which was originally scheduled to end in Nov. 5 last year, MPIC would have the exclusive right to purchase additional Meralco stake from the Lopezes.

The strategic stake in Meralco under discussion is valued at P22.4 billion.

This will cement the Pangilinan group?s position as the controlling bloc in Meralco. Pangilinan bought Meralco shares last year to block San Miguel Corp. from increasing its stake in the country?s largest power distributor. San Miguel, which has been diversifying from its core food and beverage businesses to heavy industries, planned to use Meralco?s network of power lines as a launch pad for its own foray into the telecommunications sector.

The country?s telecom industry is currently dominated by Philippine Long Distance Telephone Co., Piltel?s parent firm.

Piltel and MPIC said they were in the final stages of a plan to form a new holding firm that would hold their respective shares in Meralco.

?The terms of the reorganization are being finalized by MPIC and Piltel, and an announcement in this regard will be made shortly,? the two companies said in identical disclosures. ?Both parties are in the process of finalizing the required documentation and obtaining the necessary consents.?

MPIC?s share price remained unchanged at P2.22 a piece after yesterday?s trading. Piltel shares were also unchanged at P7.50 each.