Ayala announces Manila Water deal today

MANILA, Philippines — The Ayala Group is expected to announce today a deal concerning its beleaguered water company Manila Water Co. Inc. which insiders said was finalized over the weekend. 

Manila Water will issue a disclosure early Monday morning, people familiar with the matter said.

Stock market investors are speculating that a new investor will come in and partner with the Ayalas in operating Manila Water, a move that could possibly save the company from more attacks from President Duterte.

Tycoon Enrique Razon, who also owns International Container Terminal Services Inc. and Solaire Resort & Casino, is said to be among the possible new investors. 

Razon has just forayed into the water business last year.

Talks between Manila Water and Razon’s Prime Infra started late last year, people familiar with the matter also said.

The Ayalas are considering all options for Manila Water including, a possible sale of a stake in the company.

Manila Water expects to raise P9 billion from a share sale as it disclosed last week that its board approved an increase the company’s authorized capital stock to P4.4 billion -- consisting on an additional 900 million common shares -- from P3.5 billion.

The board likewise approved a minimum selling price of P10 per share for the issuance of common shares.

Prior to the suspension, Manila Water closed at P12.16 per share. Its share prices have dropped significantly since December at the height of Duterte’s attacks on businesses. 

Its 52-week price was P27.50 but since December has dropped steadily starting at P17 per share.

Market analysts are closely watching the developments with some saying that a sale by the Ayalas of a stake in Manila Water could impact on the business environment and strengthen President Duterte’s resolve to attack businesses. 

“It could be good for Ayala but not for the general business environment,” one analyst said.

Duterte has taken a tough stance against the country’s water concessionaires -- east zone’s Manila Water and west zone provider Maynilad Water Services Inc, the company led by tycoon Manuel V. Pangilinan and the Consunji group’s DMCI Holdings Inc. 

He vowed to cancel the 1997 contract and said he would file charges against the concessionaires. 

The 1997 contract was signed under the administration of President Ramos while the extension was granted by President Arroyo.

Last December, the Singapore tribunal ordered the government to pay Manila Water P7.4 billion and Maynilad P3.4 billion in indemnification supposedly for lost revenue from an unenforced rate hike.

Duterte said he would not honor the Singapore ruling and also moved to cancel the extension of the contract. 

The government has yet to make a final decision on the contract review.