JG Summit to partially pay Meralco stake in cash

MANILA, Philippines – JG Summit Holdings Inc., the flagship firm of tycoon John Gokongwei, will pay in cash about a third of the P72 billion purchase price for its minority stake in power giant Manila Electric Co. (Meralco).

The rest — about P50 billion — will be raised via bank loans and bond issuances, according to JG Summit president and CEO Lance Gokongwei, son of John.

“JG Summit has a cash-on-hand of $500 million,” the younger Gokongwei told reporters on Tuesday, October 8, during an event of its airline unit, Cebu Pacific Air.

The diversified conglomerate has already raised close to P12 billion by unloading a portion of its stake in snacks leader Universal Robina Corp. (URC) on October 4. 

READ: JG Summit sells URC shares to fund Meralco puchase

The Gokongwei group acquired its 27% stake in Meralco, the country’s biggest power firm, from diversified conglomerate San Miguel Corporation.

READ: JG Summit agrees to buy San Miguel’s Meralco shares

The deal marked the exit of San Miguel in Meralco and the entry of the Gokongwei group into the power business.

The Gokongweis join the group of businessman Manuel V. Pangilinan in the Meralco board. Pangilinan’s group controls Meralco.

The Gokongwei and Pangilinan groups are partners in other businesses and ventures, including Philippine Long Distance Telephone Co. (PLDT), which bought Digital Telecommunications (Digitel) from the Gokongweis in 2011.

They are also jointly bidding for the P17.5 billion Mactan Cebu International Airport expansion and operation project.

Gokongwei said they remain on the look out for other possible investment opportunities in power.

“From our prospective it is a very well ran company and its direct play on the continuing growth of the Philippine economy. Obviously as the economy grows, the demand of the electricity grows also, so that’s the reason,” he explained. – Rappler.com