The Lopez group is planning to raise about $500 million (P23 billion) to support its possible bid for the 29-percent government stake in Manila Electric Co. (Meralco).
Meralco chairman Manuel Lopez said yesterday that the amount would enable the Lopez family to acquire government’s stake in Meralco valued at approximately P26.8 billion based on current market prices.
“We are eyeing whatever is put in the auction block whether its Republic of the Philippines (ROP) or the shares held by the GFIs (government financial institutions),” Lopez said.
The National Government and GFIs, led by pension funds Government Service Insurance System (GSIS) and Social Security System (SSS), and Land Bank of the Philippines, own a combined 29-percent stake in Meralco.
Lopez said they intend to raise the amount through a combination of strategic partnership, equity participation and borrowings.
He said they have, in fact, started talks with possible potential partners. “We are currently holding discussions with some potential partners.”
Asked if they would tap Spanish power utility firm Union Fenosa as a potential partner in this major equity acquisition, Lopez said: “We hope they would remain with us. We have a very good relationship with them.”
He said the borrowings, on the other hand, may be undertaken by First Philippine Holdings Corp. (FPHC), the Lopez group’s main investment arm.
The Lopez group and FPHC own about 17 percent of Meralco while Union Fenosa, holds roughly about nine percent. The remaining shares are being held by the public and other investors.
The Department of Finance (DOF) recently announced its plan to sell the National Government’s stake in Meralco in the third quarter of the year to help bridge its budget gap.
Despite several controversies confronting Meralco, the Lopez family wants to maintain its control over the power utility company.
Meralco officials are also optimistic of brighter prospects for the company this year.
In his report to the company’s stockholders yesterday, Meralco president Jesus Francisco said they expect steady growth in energy sales in 2007.
Francisco said they are projecting sales to rise 2.5 percent this year compared to a 1.1 percent growth in 2006. Sales increased a mere 0.6 percent in 2005.
Based on its 2007 sales forecast, the company sees the commercial sector leading growth with a 3.8 percent increase; the industrial segment with 2.5 percent and residential sector with 1.1 percent, for an overall growth of 2.5 percent.
Meralco is also bullish on its financial prospects this year due to a favorable ruling from the Supreme Court on its unbundling case in December. The ruling, coupled with savings from the payment of its foreign denominated loans, is expected to give a big boost to the company’s financial performance this year.