CONGLOMERATE Metro Pacific Investments Corp. (MPIC) said on Monday it has agreed to acquire an additional 25 percent interest in Beacon Electric Asset Holdings from PLDT Communications and Energy Ventures Inc. (PCEV), a subsidiary of sister company Philippine Long Distance Telephone Co. (PLDT) for P26.2 billion.
In a disclosure to the Philippine Stock Exchange, MPIC said that it has entered into a sales and purchase agreement with PCEV to acquire a further 25 percent interest in Beacon Electric.
MPIC will pay P17 billion in cash for the additional stake and the remaining P9 billion will be paid in installment over the next four years.
Beacon Electric owns some 35 percent of Manila Electric Company (Meralco) and 56 percent of Global Business Power Corp. (Global Power). Global Power is the leading power supplier in the Visayas with an aggregate 852 megawatts of coal and diesel-powered generating capacity at present and another 670 MW for further expansion.
MPIC said that upon completion of the transaction, it will continue to own a direct 15 percent interest in Meralco, and by way of its 75 percent interest in Beacon Electric, a further 26.2 percent.
This would take its effective ownership interest in Meralco to 41.2 percent and in Global Power to 42 percent directly and about 9.1 percent indirectly (through Meralco).
Conversely, PCEV’s interest in Meralco will be reduced to an effective interest of 8.7 percent.
“There will be no change in the aggregate interest of MPIC, PCEV and Beacon in Meralco which remains at 49.96 percent,” MPIC said.
“Following my statement of last Friday that we were in active discussions with PLDT in this respect, I am delighted to confirm that we were able to reach agreement on purchase price and terms during the weekend. I believe this investment represents good value for MPIC in light of the long-term growth outlook of the Philippine power sector,” said Jose Ma Lim, chief executive officer of MPIC.
“You will recall that last year, we substantially reduced the leverage in Beacon. Meralco is now the single largest source of cash generation for MPIC and in undertaking this investment, we have enhanced our overall cash flow and further improved our growth prospects,” he added.
In addition, MPIC said that since such purchase agreement is a related party transaction, the PLDT and PCEV directors who are also on MPIC’s board inhibited from taking part in the discussion at the MPIC board meeting, which decided on the purchase and sale.
“The transaction has also been reviewed by MPIC’s audit committee, in accordance with MPIC’s internal policies,” it said.
Meralco is the biggest electricity distributor in the Philippines. PCEV is a holding company whose primary asset is its holding in Meralco, now held indirectly through Beacon. MPIC is the Philippines’ largest infrastructure investment management and holding company.