Phil. Stock Market Discussions, Comments and Forecast
The group of businessman Manuel V. Pangilinan is keen on increasing its stake in Manila Electric Co. (Meralco) by the second quarter of next year to secure “effective control” of the electricity retailer amid its intention to enter the power generation sector.
David Nichol, chief finance officer of Pangilinan’s local infrastructure flagship Metro Pacific Investments Corp. (MPIC), said last week the group is targeting an “aspirational” stake of up to 46 percent—from its current 41.4 percent.
The additional shares could be worth as much as P11.46 billion based on Meralco’s P221 close on Friday. Nichol said any plan to boost its current stake, however, will be reserved until April 2011 at the earliest.
This, as Beacon Electric Asset Holdings Inc., the holding firm for the group’s Meralco shares, is a mere 0.2-percent shy from the tender offer minimum of 35-percent ownership following consolidation moves earlier this year.
Individuals or groups are required by law to make an offer, typically at a premium, to all other shareholders of a target public company upon breaching the tender offer limit within 12 months.
“We can’t do anything yet because we are already at the takeover threshold,” Nichol told reporters in a chance interview.
“I think [45 percent or 46 percent of Meralco]…that will be pretty good. But it’s an aspiration. We’re not in negotiations with anybody else [at the moment],” he added.
Pangilinan is trying to avoid a similar scenario late last year when the Government Service Insurance System (GSIS), then a minority Meralco shareholder headed by Winston Garcia, filed cases against MPIC for allegedly skirting the tender offer rule.
The GSIS abruptly dropped its complaint in January when it sold its roughly 4-percent stake to the group of businessman Eusebio Tanco, owner of Asian Terminals Inc. and education chain Systems Technology Institute or STI.
Beacon Electric, now the single-largest shareholder of Meralco, holds about 34.8 percent of the power distributor.
The shares were previously owned by MPIC and Philippine Long Distance Telephone Co. subsidiary Pilipino Telephone Corp., which continues to hold another 6 percent of Meralco.
The companies are all units of Hong Kong-based First Pacific Co. Ltd., where Pangilinan serves as chief executive officer and managing director.
Nichols said there are no current discussions with Tanco for his Meralco shares, which analyst earlier speculated were already committed to Pangilinan’s group.
Other notable shareholders of Meralco include Lopez-led First Philippine Holdings Corp. which owns 6.6 percent and diversified conglomerate San Miguel Corp. which directly owns 27 percent.
Securing less than a majority but so-called effective control over Meralco will help Pangilinan steer the company as it enters the lucrative power generation sector.
Nichol said Meralco is committed to put up as much as 1,500 megawatts of power supply at a cost of P90 billion.
“We are not yet looking at renewable energy. It’s all hydrocarbons,” the company executive said. “There are several sets of talks going on with several possible partners.” The law allows a power distributor to sell half of its own generating capacity. Nichol said Meralco would prefer a majority stake in its power-generation ventures.