Aboitiz group gets favorable court ruling on VECO

The Cebu Regional Trial Court has ordered the creation of a management committee to take over Hijos de F. Escano Inc., which is 46 percent owned by Aboitiz Equity Ventures Inc. (AEV).

Hijos is a privately-owned holding company whose principal assets include controlling shareholdings in Visayan Electric Co. Inc. (VECO). AEV owns at least 30 percent of VECO.

The Cebu RTC has also ordered the return of the swapped VECO shares from Vivant Corp., a publicly listed firm whose majority owner is the Garcia family of Cebu. It likewise ordered the partial liquidation of Hijos.

The partial liquidation is to take the form of the surrender by AEV of all its shares in Hijos (which constitute 46.66 percent of the total Hijos shareholders) for cancellation.

In exchange for those shares to be surrendered and cancelled, AEV is to receive 1.66 million VECO shares and a distribution of 46.66 percent of Hijos‚ cash and liquid assets after payment of debts. The share capital of Hijos is to be reduced to the extent necessary.

The court order was in response to a complaint filed against VECO, Vivant and a group of individuals for damages and the dissolution of Hijos.

The complaint was filed by minority directors of Hijos, namely, Jon M. Aboitiz, Erramon I. Aboitiz, and Aboitiz Power Corp., a wholly owned subsidiary of AEV.

The petitioners claimed that a share-swap transaction signed by Hijos with Vivant on April 29, 2003 resulted in a misappropriation of shares of the minority owners and 14,000 shareholders amounting to a total of more than P250 million.

The questioned transaction involved the swap of 2,086,385 shares of VECO owned by Hijos in exchange for Vivant shares.

AEV sought P613 million in damages and a return of the transferred properties so that Hijos could be dissolved and its assets distributed proportionately among its shareholders.

AEV said the transaction was approved and implemented by the Garcia group despite objections of the minority shareholders.