Meralco stockholders mull buying gov’t stake

With an improving financial stance, Manila Electric Co. (Meralco) is considering changes in its equity structure, a ranking company official said.

Meralco chairman Manuel Lopez told reporters that the Lopez group may likely increase its shareholdings by buying some of the government’s stake in the power utility firm.

"It is something that we are looking at," Lopez said.

At the onset of the year, the government, through the Department of Finance (DOF), had announced plans to push through with the sale of its Meralco shares.

It has been the National Government’s thrust to privatize its stakes in utility companies to raise more revenues to bridge its budget gap.

This year, NG is projecting to generate some P25.7 billion from its privatization efforts including proceeds from the successful sale of its indirect stake in Philippine Long Distance Telephone Co. (PLDT).

The Privatization and Management Office of the DOF has said that government intends to dispose of some 12.03 percent of Meralco’s total shares, equivalent to 212,120,855 shares. 

At present, the government holds about 29 percent in Meralco; the Lopez-owned First Philippine Holdings Corp. owns 14 percent; Spanish power firm Union Fenosa accounts for nine percent; and the remaining shares are being held by the public and other investors.

Lopez said Union Fenosa, one of the stockholders of Meralco, is also considering jacking up its equity in the utility firm.

"If things become more stable in the power industry, (Union Fenosa) is looking at increasing its investment (in Meralco)," Lopez said.

Lopez said the optimism of the Spanish partner is anchored on the continuing improvement in the company’s financial condition over the past few months.

Last month, the Supreme Court upheld Meralco’s plea to consider its unbundled rate petition with the Energy Regulatory Commission (ERC) which may result to an additional P5.9 billion in the company’s bottom line.

This amount was set aside by the company since October 2006 as provision for probable losses in case the High Tribunal rules against Meralco’s petition.

Meralco also realized huge savings from the peso appreciation which prompted the company to prepay its loan obligations and cancelled temporarily its collection of currency exchange rate adjustment (CERA) on its customers which may last up to July this year.

For the first time in seven years, Meralco is also set to issue a P1 per share dividend on Feb. 5 to its common stockholders of record as of Jan. 10.

Two years ago, Union Fenosa announced a possible sell-out of its shares in Meralco over disappointment on the utility firm’s continuing poor financial performance.

Union Fenosa’s apprehension was also triggered by the then judicial issues concerning Meralco such as the previous decision from the SC ordering the distribution firm to refund its customers about P30 billion for alleged "excess charges."

The P30-billion refund, which is still ongoing, caused a huge drain in Meralco’s finances.