Manila Water to double capital to P4-B ahead of IPO

Manila Water Co. is doubling its authorized capital stock to P4 billion for a capital restructuring program in line with a planned initial public offering (IPO).

MWC is an affiliate of Ayala Corp., one of the largest and most established conglomerates in the country with investments in the real estate, telecom and the banking sectors.

In a disclosure to the Philippine Stock Exchange MWC said the proposed increase in capitalization was approved by the company’s board of directors a special meeting yesterday.

The capital hike will be partially funded by a fresh equity infusion of P500-million worth of new preferred shares.

Ayala Corp. will subscribe to P310 million of new preferred shares to be issued by MWC while the balance will come from other MWC shareholders.

The MWC board also approved the company’s acquisition of the shares owned by one of its foreign shareholders, International Water Ltd. (IWL), a subsidiary of US-based Bechtel Corp. and Edison SpA.

MWC said its acquisition of the IWL shares will further stabilize the company’s capital base with its shareholders, including Ayala Corp. and United Utilities, an international operator based in the United Kingdom.

The increase in capital will be implemented after the completion of MWC’s acquisition of IWL’s ownership interest in the company.

Commenting on the divestment by IWL, MWC chairman Fernando Zobel de Ayala said: "We regret the divestment decision of one of our strategic investors. However, the remaining shareholders are pleased with the opportunity to demonstrate our renewed and increased commitment to MWC which has performed very well in spite of the challenging business environment."

MWC serves the cities of Marikina, Pasig, Mandaluyong and Makati, most of Quezon City, a small portion of the city of Manila, and the municipalities of Rizal province: Angono, Baras, Binangonan, Cainta Cardona, San Mateo, Tanay, Taytay and Teresa.

The company is one of the two private concessionaires which were awarded in 1997 the right to operate the water service in Metro Manila. The company has since made significant improvements in service in terms of water quality and service availability throughout the East Zone concession area.

Last year, MWC reported a net income of P553 million or an increase of 214 percent from 2001 levels. Revenues grew by 62 percent to P2.7 billion.

Household connections rose to 470,501 as of yearend 2002 or 10 percent more than the end-2001 levels. Water supplied to the East Zone concession amounted to 1.663 billion liters per day.

For the next five years, the company is planning to serve an additional one million customers including 500,000 in depressed communities.