Metro Pacific acquires P13.24-B direct stake in Meralco
The conglomerate raises its stake in the utility to 27.48% in anticipation of growth

File photo by AFP

MANILA, Philippines – Metro Pacific Investments Corporation (MPIC), the local unit of Hong Kong-based conglomerate First Pacific Company Ltd., is acquiring a 5% direct interest in power distributor Manila Electric Company (Meralco) for P13.24 billion ($301.95 million).

In a disclosure to the Philippine Stock Exchange Tuesday, June 24, MPIC said it would acquire 56.35 million Meralco shares owned by Beacon Electric Asset Holdings Inc., a special purpose company jointly owned by MPIC and affiliate PLDT Communications and Energy Ventures Inc. (PCEV), for P235 ($5.36) per share.

MPIC retains its partnership with PCEV for holding most of its investment in Meralco, while increasing committee participation in the business as a result of its direct holding, the company said in a statement.

“The deepening of our investment in Meralco is reflective of our expectation of growth in this business, especially from much needed power generation in Luzon,” MPIC Chief Executive Jose Ma. K. Lim said.

Upon completion, MPIC will own 5% in Meralco directly and through Beacon a further 22.48%, bringing its interest in Meralco to 27.48%.

On the other hand, PCEV’s interest in Meralco will be reduced to 22.48%.

There will be no change though in the aggregate interest of MPIC and Beacon in Meralco which is 49.96%.

MPIC said it would initially pay Beacon P3 billion ($68.4 million) for the stake, while the balance of P10.24 billion ($237.18 million) would be paid on or before February 2015.

“MPIC will receive a dividend from Beacon at the same time as it settles payments for this transaction such that MPIC’s net cash investment in the transaction will be P6.6 billion ($150.52 million), which MPIC will fund from internal sources,” the conglomerate said.

Meralco is the biggest electricity distributor in the Philippines. MPIC is the Philippines’ largest infrastructure investment management and holding company.

Other investments

MPIC also announced it was investing P4.5 billion ($102.63 million) to increase its interest in the Don Muang Tollway in Bangkok to 29.45%.

It is also investing up to P8.5 billion ($193.85 million) in equity and shareholder loans, over a 5-year period, in respect of its current 55% interest in the Light Rail Manila Consortium – the sole bidder for the government’s LRT 1 Cavite Extension project.

MPIC’s aggregate cash investment in Meralco, DMT, and LRT 1 will total some P19.6 billion ($446.7 million).

“Through a combination of our previously announced hospitals’ group dilution and/or sell down, cash in hand, and borrowings, we are able to fund these investments on our existing capital base,” Lim said. –