Manila Water seeks exemption from SEC’s reportorial requirements

The Ayala-led water utility firm Manila Water Co.(MWC) is seeking exemption from reportorial requirements imposed by the Securities and Exchange Commission (SEC) to publicly-listed companies.

The SEC’s Corporation Finance Department director Justina F. Callangan said MWC has requested exemption from reportorial requirements for the years 2001 to 2003, pointing out that it should not be classified as a public company with equity securities listed in the stock exchange.

The SEC was supposed to charge MWC penalties of P1.675 million for violating Section 17.2 of the Securities Registration Code requiring registered companies to file annual, current and periodic reports. The SEC said MWC failed to submit its reports for the first to third quarters of 2003 but MWC corporate secretary Primer B. Leonen appealed in a letter to reconsider the decision.

"While MWC had assets in excess of P50 million in years 2001 and 2002, it could not be categorized as a public company given the fact that during those years, it only had 16 stockholders, only five of whom each held at least 100 shares of A class and the remaining stockholders held one share each to qualify them as MWC directors," said Callangan.

She said that employees who subscribed to the employees stock option plan (ESOP) covering 104,443,965 MWC shares should not be treated as MWC stockholders for the purpose of classifying the company as a public company.

"The allotment, subscription and issuance of the ESOP shares is an isolated transaction in compliance with the contractual obligations of MWC under the Metropolitan Waterworks and Sewerage System (MWSS)-MWC concession agreement, and the shares were alloted only to employees of MWC and not to the public."

Callangan added that the MWC employees did not actually pay for the ESOP shares since the full payment of the subscription price came from the stock purchase bonus granted annually by MWC to employees and automatically applied in payment of the annual installments of the ESOP shares.

The ESOP shares, which carry no voting rights, have a lock-in period of five years or up to Dec. 2004.

Earlier, the company said it expects to raise $75 million from its planned inital public offering (IPO) of between 20 to 25 percentof its shares early next year.

MWC president Antonino Aquino said they will use the IPO proceeds and the fresh equity to reduce systems losses, develop new water sources and fund possible business ventures outside the metropolis.

The company’s capital expenditure budget is set at P19 billion over a five-year period. A portion of the budget will be used to pay the company’s concession fees that would fund new projects such as the development of new water sources.

Last June, the International Finance Corp., the World Bank’s investment arm, agreed to invest $45 million in MWC through a $30-million, 13-year loan facility and a direct equity infusion worth $15 million.