7 groups vie for right to sell government stake in Meralco

Five foreign investment banks and two local groups have expressed interest in underwriting the sale of the government’s 10-percent stake in Manila Electric Co. (Meralco).

Finance Secretary Jose Isidro Camacho said they have downscaled the proceeds forecast from P7 billion to P4 billion although he did not say why. Market watchers said the power distributor’s stock, along with other blue chips, have gone down because of the generally lackluster performance of the stock market.

And with no positive news expected, especially on the economic front, the bearish sentiment in the stock market is expected to linger and further bring down the value of individual stocks.

Yesterday Meralco A shares closed at P37 per share while Meralco B shares closed at P44.50 per share.

Still, Camacho said interest in Meralco’s sale has attracted five investment banks and two local groups.

Camacho said at least five groups have presented their proposals to undertake the sale of government’s interest in Meralco in addition to the earlier proposal of the Investment House Association of the Philippines in joint venture with the ING Bank.

The five new groups are Salomon Smith Barney, Lehman Brothers, Credit Suisse First Boston, Deutsche Bank and ABN Amro.

Camacho said the finance department is still studying the proposals and will make a firm decision by September.

"We will make sure a decision is made by September because we want to really push through with the sale this year," Camacho said.

The DOF is also studying the possibility of selling the 10-percent stake through the stock market, a scheme earlier proposed by the IHAP.

Other proposals calls for the securitization of the future income of government’s shares in Meralco before government finally decides to put its interests on the auction block.

Another possibility is to issue other financial instruments such as warrants or derivatives. – Rocel Felix