MPIC hikes Meralco stake

MANILA, Philippines–Manuel V. Pangilinan-led Metro Pacific Investments Corp. (MPIC) has increased its direct exposure in the power distribution sector after buying shares of Manila Electric Co. (Meralco), the country’s largest electricity retailer, from an affiliate at a 10.9-percent discount.

MPIC, which also operates tollroads, a water utility firm in Metro Manila and the country’s biggest chain of private hospitals, said in a stock exchange filing Wednesday that it had agreed to acquire 112.71 million shares of Meralco, equivalent to a 10-percent stake, for about P235 a share, or a total of P26.5 billion.

The deal will increase MPIC’s direct stake in Meralco to 15 percent and will be mainly funded by P25 billion in “new” 10-year bilateral term-loan facilities, it said.

The acquired shares were held by a special purpose company called Beacon Electric Asset Holdings Inc., jointly owned by MPIC and PLDT Communications and Energy Ventures, a unit of Philippine Long Distance Telephone Co., also chaired by Pangilinan.

That acquisition price, which MPIC said complied with its internal corporate governance code, was at a 10.9-percent discount to Meralco’s closing price before the deal was announced.

Payments to Beacon Electric will be made on a staggered basis: P1 billion immediately, P17 billion by June this year and the balance by July 2016, it said.

“We have previously indicated MPIC’s intention to deleverage Beacon and have concluded the optimum way to achieve this is to acquire more of Meralco from Beacon,” MPIC CEO Jose Ma. Lim said in the filing.

“The deepening of our investment in Meralco is reflective of our expectation of growth in this business, especially from much-needed power generation in Luzon,” he added.

The combined stake of PLDT and MPIC in Meralco stood at about 49.96 percent, the filing showed.

For Metro Pacific alone, its direct and indirect stake in Meralco, which includes its ownership in Beacon, would be at 32.48 percent while PLDT Communications and Energy’s stake will fall to 17.48 percent.

The electricity distributor’s other major shareholders include the Gokongwei family’s JG Summit Holdings Inc. and the Lopez clan’s First Philippine Holdings Corp.

Beacon Electric was established to serve as the holding company for both MPIC and PLDT’s Meralco shares, but recent moves by the former suggest the Pangilinan-led group was gradually changing course.

Nevertheless, Lim said in the statement that MPIC, for now, “retains its partnership with [ PLDT Communications] for the rest of our investment in Meralco.”