VECO is the second largest private electric distribution utility in the country with its franchise covering the progressive Cebu Island in Central Philippines.
In a disclosure to the Philippine Stock Exchange, AEV said it signed yesterday a memorandum of agreement with Vivant "for the purpose of amicably settling all litigation among the parties and to cooperate in respect of the management and preservation of VECO’s assets, franchise and business for the benefit of all stakeholders."
The dispute came about when Hijos de F. Escano, a holding company owned by the Garcias, swapped 30 percent of its controlling stake in VECO in exchange for Vivant shares. AEV, which questioned the transaction, owns approximately 46 percent of Hijos and 30 percent of VECO.
The Aboitizes had filed a case with the Cebu Regional Trial Court, seeking the return of the transferred properties so that Hijos could be dissolved and its assets distributed proportionately among its shareholders.
AEV said the MOA aims to restore Hijos’ VECO shares transferred under the share-swap transaction and redistribute pro-rata the excess of Hijos’ 25 percent shareholdings in VECO to its shareholders to comply with the Electric Power Industry Reform Act of 2001.
Upon implementation of the agreed redistribution, the Garcia family will own 48 percent of VECO, through its direct ownership of 23 percent and Hijos‚ 25 percent.
On the other hand, AEV’s direct ownership in VECO will increase to 43 percent.
The MOA also provides that the Garcias and the Aboitizes will share in the management of VECO with the former retaining control of the VECO board.
AEV said the MOA’s effectivity is, however, subject to compliance on or before April 2, 2004 of specific conditions, which include the finalization of a shareholders‚ cooperation agreement, the setting up of an escrow account that will serve to enforce certain conditions of the MOA and mutual settlement of the cases filed with the courts.