Meralco to spend P7 B for expansion program this yr

Manila Electric Co. (Meralco) will spend about P7 billion for its expansion and systems improvement program this year, a top official of the Lopez conglomerate said.

Benpres Holdings Corp. chief operating officer Jose Xavier Gonzales told reporters that aside from internally generated funds, Meralco will have to top the bond market or borrow from syndicated loans in order to raise the capital requirements, considering that the power firm's program is a "little bit tight on the cost side."

The Lopez family through holding arm Benpres and its subsidiary First Philippine Holdings Corp., controls Meralco, the biggest power utility company in the country.

Gonzales said the fund out-sourcing program was resorted to following the delay in the planned offering of about $300 million 10-year Yankee bonds.

Meralco had planned to raise capital from the global financial markets last year and had completed an extensive roadshow in Asia, Europe and the US. However, the significant weakness in the international capital market prompted the company to deter the bond offering and look for other sources of funds.

"The bond offering failed to push through since our expectations on rates were not met," Gonzales said.

Meralco is continuously expanding and upgrading its facilities, covering its franchise area of about 80 percent of Luzon, to world class standards, in preparation for the eventual entry of competition under a deregulated electricity industry.

The company emerged as one of the top 10 leading companies in Asia in 1998, based on a survey by the Far Eastern Economic Review, following the entry of Spain's Union Fenosa as a strategic foreign partner.