MRC Allied to focus on power business with entry of Tan group

MANILA, Philippines - Listed property firm MRC Allied Industries Inc. is shifting its focus to power generation with the expected cash and asset infusion worth as much as P4.9 billion from a son of tycoon Lucio Tan and an investment fund manager.

Benjamin Bitanga, a majority shareholder of MRC, told reporters yesterday that the company will receive P1.4 billion in cash from a fund manager which he declined to identify, as well as a P3.5- billion coal or bunker fuel plant from Lucio “Bong” Tan Jr.

Bitanga said the proposed transactions are slated to be completed within the first half this year, noting that a deal is set to be finalized with the fund manager in the next 30 days.

Upon completion of these transactions, Tan will become the controlling shareholder of MRC, paving the way for the realignment of the listed firm’s business.

“We envision that the company will be more active in the power business although we’re keeping our real estate assets,” Bitanga said.

Bitanga said the power plant, located in northern Luzon, has a capacity of 200 megawatts and can generate sales of $40 million or P2 billion a year.

With power generation as its main business, MRC is open to acquiring more power facilities which would not go through a competitive bidding process,  Bitanga said.

He said MRC is seen to swing to pro-fitability this year with the acquisition of the power plant, which shall start commercial operations in the second half of the year.

In 2008, the company incurred a net loss of P143.62 million, an increase of more than three-fold from P37.86 million the previous year.

In the nine months ending September last year, MRC reported a net loss of P4.34 million, a decline of 87.55 percent from P34.86 million in the same period a year earlier.

Bitanga said the firm is keeping its 160-hectare industrial estate in Naga City, Cebu even as the property business will be relegated to the back burner. Located 35 kilometers away from the Mactan International Airport, the industrial estate known as the New Cebu Township One is registered with the Philippine Economic Zone Authority (PEZA) as a special economic zone.

MRC has a pending application with the Securities and Exchange Commission to undertake a capital restructuring program aimed at reducing its deficit.

The program involves a decrease in the par value of MRC’s common shares from P1 per share to 20 centavos with the corresponding decrease in its authorized capital stock from P500 million divided into 500 million common shares with a par value of 20 centavos per share.

Following the decrease, MRC would raise its authorized capital stock of up to P9.5 billion or 47.5 billion shares at a par value of P0.20 per share. This is to facilitate the additional cash infusion by potential investors.