First Holdings mulls sale of additional 1.7% stake in Meralco

MANILA, Philippines - Lopez-owned First Philippine Holdings Corp. (FPHC) may sell an additional 1.7-percent stake in Manila Electric Co. as a leverage to maintain its existing two seats on the board of the power utility giant.

In a luncheon with reporters yesterday, FPHC president and chief operating officer Elpidio Ibañez said the group aims to retain at least five percent of Meralco, which should give it room to sell 1.7 percent more of its shareholdings in the power retailer. He was quick to say though that this was something that would need to be negotiated between FPHC and Metro Pacific Investments Corp. (MPIC) which has the right of first refusal over Meralco shares owned by the Lopez Group.

“We want to maintain strategic presence and have at least two board seats. We hope they can help us elect more directors even if we just maintain five percent of the power firm,” Ibanez said.

The 1.7-percent stake is equivalent to 19 million shares valued at P3.76 billion based on Meralco’s closing price yesterday.

FPHC’s current stake of 13.4 percent is expected to whittle down to 6.7 percent once MPIC exercises its option to buy half of it or 74.7 million common shares at P300 per share for a total value of P22.4 billion. The option is exerciseable on or before March 31 this year. The sale will also leave FPHC with only board seat from the existing two.

The deal, when completed, will raise the stake of the MPIC-PLDT group led by Manuel V. Pangilinan to 41.4 percent from the current 34.7 percent if and when the call option is exercised, bringing the group closer to clinching majority control of the country’s biggest power distributor. Together with the Lopez family’s interest, the group owns a total of 48.1 percent of Meralco.

Aside from the right of first refusal, the Pangilinan and Lopez groups have come up with a revised agreement preventing the sale or transfer of any of the remaining Meralco shares owned by the Lopez Group for a period of three years.

Conglomerate San Miguel Corp., on the other hand, holds a 27-percent interest in Meralco while Global 5000 Investments, an allied group headed by former Trade and Industry Minister Roberto V. Ongpin, owns eight to 10 percent.

The Lopez Group sold a 20-percent stake in Meralco PLDT in March for $414 million and votes its remaining holdings with the Pangilinan Group. Together, they control 48 percent of the utility while about nine percent is held by the public.

Meralco owns the country’s largest power franchise and has become an attractive target after regulators allowed it to raise power tariffs by up to 27 percent, its first hike since 2003.