BUSINESS MIRROR
SUNDAY, 06 MARCH 2011 18:51 MIGUEL R. CAMUS
THE group of Manuel V. Pangilinan is studying several proposals that may involve the sale of part of its stake in Manila Electric Co. (Meralco) to potential foreign and local parties eyeing a partnership in the electricity retailer’s foray into power generation, a top official said.
David Nicol, chief financial officer of Metro Pacific Investments Corp. (MPIC), told the BusinessMirror last week the company has received “informal” offers from groups seeking to partner with Meralco in exchange for a stake in the country’s biggest power distributor.
Nicol was quick to add that any move toward these partnerships would be premised on two factors, namely, the Pangilinan group’s ability to acquire additional Meralco shares as not to be diluted from its present 41 percent, and the steep qualifications for partners beyond their financial capacity.
“We have had some approaches. I think what is happening is that people have watched Meralco’s progress since we have been involved and I think they are interested in the idea of a combined distribution and power integration [deal],” Nicol said.
“But I think it is still too early to say this is our intention,” added the company executive, declining to name the interested parties.
MPIC, together with sister-firm PLDT Communications and Energy Ventures Inc., owns 34.8 percent of Meralco through holding company Beacon Electric Asset Holdings Inc.
PLDT Communications separately owns another 6.1 percent of the electricity retailer.
Nicol said the group is interested in partners that are large utilities which can bring in new types of technology for Meralco.
“The people we have spoken to who we are really interested in have either a combination of generating and extensive types of technology. They don’t just have coal, hydro, gas and renewables. They have quite a wide range of technologies to bring to the table,” Nicol said.
Another consideration for partners would be experience with “open access,” a type of scheme that will allow power users to choose their own suppliers, set to be implemented in the Philippines in two years.
Such tie-ups could prove valuable for Meralco, which seeks to spend up to $2.3 billion to build 1,500 megawatts worth of generating capacity through 2016.
Nicol said any move to offer Meralco shares to partners would depend on its ability to increase its current stake.
Already the single largest shareholder in the power utility, Pangilinan’s group had earlier disclosed its intention to further hike its ownership at the right time.
Still up for grabs is a 6.6-percent stake owned by Lopez-led First Philippine Holdings Corp. and approximately 4 percent held by the group of businessman Euesbio Tanco, owner of the STI education group.
Both parties have expressed interest to unload their shares, now worth a combined P27.4 billion, at the right price. Meanwhile, corporate rival San Miguel Corp. and its allies reportedly control about 40 percent of Meralco.
Pangilinan is currently withholding plans to buy additional shares until next month, given that Beacon Electric is a mere 0.2 percent away from the tender offer threshold of 35 percent after it acquired additional shares in the first quarter of last year.
Pangilinan will be required to make a costly buyout offer to all other shareholders of Meralco should he breach the tender offer limit before the 12-month period expires at the end of this month.
Meralco said earlier that its net income rose 61 percent to P9.69 billion in 2010 as energy sales rose 10 percent on the back of higher consumption.
MPIC and PLDT Communications are units of Hong Kong-based First Pacific Co. Ltd., where Pangilinan serves as chief executive officer and managing director.
(Miguel R. Camus)
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