AEV, along with minority directors of Hijos de F. Escano Inc., filed with the Cebu Regional Trial Court last Monday a complaint against the Garcia family of Cebu, which controls Vivant. AEV owns approximately 46 percent of Hijos and about 30 percent of Visayan Electric Co. (VECO). Hijos, on the other hand, is majority owned by the Garcia family.
In its complaint, AEV alleged that the share-swap signed by Hijos with Vivant last April 29 misappropriated from both the minority shareholders of Hijos such as AEV the amount of P80 million and from Hijos itself, P170 million.
The questioned transaction was essentially a swap of 2.08 million shares of VECO owned by Hijos (constituting about 30 percent of VECO’s outstanding capital stock) in exchange for Vivant shares. The VECO shares were traded at book value, whereas the Vivant shares were valued at premium to its book value.
AEV said the effect of these valuations was to reduce the holdings of the minority shareholders and subsequently lower AEV’s beneficial ownership in VECO.
The share-swap deal was approved and implemented by the majority directors despite objections of the minority shareholders of Hijos and their repeated requests to reverse the transaction, AEV said.
The Garcias claimed that the share-swap was made in order to comply with the provisions of the Electric Power Industry Reform Act.
AEV, however, alleged that the deal "benefitted the Garcia directors, their family and their related interests while causing substantial losses for Hijos and its minority shareholders."
The company sought the return of the transferred properties so that Hijos may be dissolved and its assets distributed proportionately among its shareholders.