Lopez Group sells tollroad business to Metro Pacific

The Lopez family is exiting the tollroad business with the sale of its corporate vehicle First Philippine Infrastructure Inc. (FPII) to Metro Pacific Investments Corp. (MPIC) for P12.26 billion.

The Lopezes, through First Philippine Holdings Corp. and Benpres Holdings Corp., own 99.84 percent of FPII, a publicly-listed firm which, in turn, owns 67.1 percent of the Manila North Tollways Corp. (MNTC) and 46 percent of the Tollways Management Corp. (TMC).

MNTC was granted a long term concession to finance, design, construct, operate and maintain the North Luzon Expressway (NLEX). TMC, its associate, operates and maintains the NLEX. 

Angel S. Ong, president and chief operating officer of Benpres, said the divestment is in line with group’s strategy to trim debt to a more manageable level.

“This sale is the culmination of efforts to divest of the company’s tollroad business in support of its Balance Sheet Management Plan. Our commitment to our shareholders has always been to pursue financial restructuring that will make Benpres a stronger, more sustainable company going forward,” Ong said.

In a disclosure to the Philippine Stock Exchange, Benpres said it will receive P6.2 billion from the sale of its 49-percent stake in FPII, formerly traded as City Resources Corp.  The remaining P6 billion will go to FPHC, which owns the remaining 51 percent of FPII.

MPIC, the local unit of Hong Kong’s First Pacific Co. Ltd., will make a tender offer for the remaining 16- percent stocks held by the public, in publicly-listed FPII to comply with the Securities and Exchange Commission’s tender offer rule.  The tender offer price to be made by MPIC, equivalent to P2.46705 per share, will amount to approximately P19.7 million.   

Macquarie Capital ( Singapore ) Pte. Ltd. acted as the financial adviser to the Lopez group.

MPIC said P11.8 billion of the total consideration will be paid in cash on closing of the deal expected on November while the balance  will be settled through assumption of certain advances.

Funding for the acquisition will come from shareholder advances from MPIC’s parent firm First Pacific and internally-generated cash. 

MPIC chairman Manuel V. Pangilinan said the transaction is in line with the group’s bid to focus on investments in infrastructure and utilities, including water distribution and tollways. 

“The proposed acquisition will not only represent a key area of growth in the infrastructure business for MPIC, but also enhance the economic growth of Central and North Luzon. MPIC recognizes that the steady increase in population and urbanization should keep pace with the provision of domestic infrastructure that links resources to their channels and destinations, “ Pangilinan said.

MPIC president and chief executive officer Jose Ma. K. Lim, for his part, said the decision is in keeping with the company’s goal “to consider carefully new investment opportunities, particularly in infrastructure, that will deliver recurring profits and strong cash flows.” 

With the continuing service improvements and marketing enhancements that our operating companies are undergoing, our involvement in toll road operations will complement and strengthen our existing investment portfolio to achieve greater shareholder value.”

With the acquisition, MPIC will effectively own 67.1 percent of MNTC which is the builder and concessionaire of the 84-kilometer world-class highway that connects Metro Manila,  with Central and Northern Luzon .

MNTC was established in 1998 in response to the call of the Philippine government for private sector partners willing to provide the capital and technical expertise needed to build the infrastructure vital to national growth.

Other shareholders of MNTC include Egis Projects S.A. of France, reportedly the world’s biggest tollways operator; Leighton Asia Ltd. of Australia, a civil works specialist with an extensive track record in toll road construction; and Philippine National Construction Corp. (PNCC), the state-owned company that holds the franchise for the operation of the expressway.