MPIC boosts direct stake in Meralco to 15%

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METRO Pacific Investments Corp. (MPIC), the holding firm of businessman Manuel Pangilinan, has acquired an additional 10 percent direct stake in major power distributor Manila Electric Co. (Meralco).

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MPIC Chief Executive Officer Jose Ma. Lim said on Wednesday that the company bought from its subsidiary, Beacon Electric Asset Holdings Inc, 112.71 million Meralco shares at P235 per share for a total acquisition cost of P26.5 billion.

He said the purchase was in line with MPIC’s “intention to deleverage Beacon” and to hike its investment in the power company amid the “expected growth in its business especially from much needed power generation in Luzon.”

Beacon is a special purpose firm jointly owned by MPIC and PLDT Communications and Energy Ventures (PCEV). MPIC is the biggest electricity distributor in the country; PCEV is a holding company whose primary asset is its Meralco holding, now held indirectly through Beacon.

MPIC now owns 15 percent of Meralco from 5 percent previously. The group — including
Beacon and PLDT — will have an effective interest of 21.39 percent in the power company from 20.06 percent previously.

MPIC initially settled the P26.5 billion transaction with a first payment of P1 billion upon the signing of the sale and purchase agreement last April 14, while another P17 billion will be paid in June and the rest, amounting to P8.5 billion, will be handed over on or before July 2016.

Capital expenditures of MPIC for 2015 will amount to P58.6 billion, while its Hong Kong-listed parent firm First Pacific Company Limited programmed a P101.82-billion spending this year.

The 2015 capex is 66 percent higher than the P35 billion last year mainly on the LRT Line 1 Extension Project.

In a separate disclosure to the stock exchange, MPIC said it has entered separate loan facilities amounting to P25 billion, which will be used to partially finance the acquisition of the 10-percent stake in Meralco.

The loans included a P10-billion fixed-rate term of 10 years from Bank of the Philippine Islands; a 10-year term loan of P10 billion from Philippine National Bank having a fixed interest rate for the first five years and repriced at the end of the fifth year; and a 10-year loan of P5 billion from BDO Unibank Inc. with fixed interest rate in the first five years and repriced at the end of the fifth year.

Besides the recently raised $200 million (P8.897 billion) from an overnight share placement and the upcoming P10 billion debt raising plans, MPIC Chairman Manuel Pangilinan said the bulk of the capital expenditures will be “self-financed.”

Incorporated in 2006, MPIC has investments in water utilities (Maynilad Water Services Inc.), toll roads (Metro Pacific Tollways Corp. and Manila North Tollways Corp.), electricity distribution (Meralco) and healthcare services (MPIC Hospital Group). MPIC is 55.8 percent-owned by Metro Pacific Holdings Inc.

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