Metro Pacific recapitalizes to fund new businesses

Metro Pacific Investments Corp. (MPIC), the local flagship of Hong Kong-based conglomerate First Pacific Co. Ltd., unveiled yesterday a recapitalization plan that involves an increase in its authorized capital stock to P12 billion from P4.6 billion and the conversion of existing advances into equity in Maynilad Water Services Inc., Makati Medical Center and Davao Doctors Hospital.

Manuel V. Pangilinan, chairman of MPIC, said the recapitalization plan will set the stage for future fund-raising activities for the company’s planned foray into infrastructure, agriculture, mining, port operations and healthcare.

The plan is expected to raise MPIC’s shareholders equity to P13 billion from P5.4 billion as of end-December last year. It  is also expected to result in the improvement of the firm’s net asset value per share by 11 percent to P1.84.

Pangilinan said the increase in capitalization will boost foreign participation in the company with the creation of preferred shares.

MPIC president Jose Ma. K. Lim said the new capitalization will comprise 11.95 billion common shares with a par value of P1 and five billion preferred shares with a par value of P0.01 each.

The minimum subscription for the increase in capital will come from the conversion of MPIC’s P2.03 billion worth of notes held by Metro Pacific Holdings Inc. (MPHI) equivalent to 1.89 billion shares. 

Under the plan, MPIC will issue up to 1.57 billion new common shares  to MPHI at P2 each share to settle advances made by MPHI to acquire 34 percent of Davao Doctors and First Pacific’s 10.3-percent stake in Maynilad. 

Lim said MPIC’s ownership in DMCI-MPIC Water Co. (Bidco) , the consortium that won the bid to acquire 84 percent of Maynilad, the water concessionaire of the western part of Metro Manila, will increase from 20.8 percent to 55.3 percent  through the conversion of First Pacific’s notes valued at $57 million, and the  acquisition of Ashmore Investment Management Ltd.’s 24.2-percent  interest in Bidco for $140 million.  Both transactions are expected to be closed in July.

Funding for the acquisition of Ashmore’s stake in Bidco will come from First Pacific, which intends to settle this through the issuance of 2.22 billion new common shares to MPHI equivalent to $100 million. The remaining $40 million will be settled by way of shareholder advances.

When completed, the acquisitions will result in a 51-percent economic interest in Maynilad, with DMCI owning 45 percent.

“With Maynilad poised to implement its service improvement program which will raise the service quality within its west zone concession as well as to grow its customer base, Maynilad will deliver greater profits this year and the years to come. The acquisition will allow MPIC to consolidate a proportionately greater share of Maynilad’s profits,” Pangilinan said.