Monday, January 6, 2014

San Miguel formally takes over ALECO


Business World Online
Posted on January 06, 2014 09:44:07 PM

DIVERSIFIED CONGLOMERATE San Miguel Corp. is scheduled to formally take over the operation and management of the power distributor in Albay today, the Energy chief said in a text message yesterday.

  “The formal turnover will be tomorrow (Jan. 7),” Energy Secretary Carlos Jericho L. Petilla said when asked if San Miguel has already taken over operations of Albay Electric Cooperative, Inc. (ALECO).

“San Miguel has already been heavily involved in the operations of ALECO since late last year. Tomorrow will formalize that through the ceremonial turnover,” Mr. Petilla said.

Officials of San Miguel and ALECO were not immediately available for comment yesterday.

San Miguel, through SMC Global Power Holdings Corp., last Oct. 29 signed a 25-year concession agreement with ALECO.

The formal turnover -- supposed to take place last month after a 60-day transition period from signing of the agreement -- was pushed back due to the Christmas and New Year holidays, according to Mr. Petilla.

The agreement provides that San Miguel will initially invest P250 million for capital expenditures for the first three years and P350 million for the separation pay of ALECO employees that will be displaced after the takeover, Mr. Petilla had said in October last year.

On Sept. 18, ALECO’s board of directors issued the notice of award to SMC Global Power following a referendum conducted on Sept. 14 in which more than 5,500 of the 9,000 participating households backed the deal. The other option given to Albay residents was the entry of another electricity cooperative. SMC Global Power was the lone bidder in an Aug. 7 auction for the right to operate and manage ALECO.

Albay was disconnected from the grid on July 31 last year due to P4 billion worth of unpaid debts. Power was restored the following day after ALECO agreed to settle June 2013 obligations totaling P19 million. 

A takeover was proposed by the Energy department as a means of rehabilitating the debt-saddled cooperative.

Mr. Petilla had said three companies were initially interested to ALECO, among them Manila Electric Co., which in the end decided not to participate in the auction.

San Miguel, which has diversified from its core food, beverage and packing businesses, recorded a P17.68-billion profit as of end-September last year, down 31.21% from P25.70 billion in the same nine months in 2012, weighed by P12.3 billion in foreign exchange losses. Nine-month sales rose 6.65% to P542.56 billion from P508.73 billion, while cost of sales grew 5.54% to P457.97 billion from P433.93 billion.

Shares of the conglomerate closed at P61.20 apiece yesterday, down P1.35 or 2.16% from P62.55 each on Friday last week. -- Claire-Ann Marie C. Feliciano   source

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