MVP hand seen behind rising Benpres stock prices

MANILA, Philippines - Shares of Benpres Holdings Corp. have been on the upswing, rising 28.8 percent since Monday on speculations that the group of telecommunications magnate Manuel V. Pangilinan has been buying shares to further strengthen its position in power utility giant Manila Electric Co.

Benpres is owned 53.7 percent by Lopez Inc., which has an indirect ownership in Meralco through its 43 percent stake in First Philippine Holdings Corp. As of end-June this year, FPHC had a 10.7 percent stake in the country’s largest power retailer.

From only P2.95 last Monday, Benpres’ share price is now worth P3.80 or seven percent higher than Tuesday’s close of P3.55 each share.

The stock rose to its 52-year high of P4 yesterday on volume of 70.84 million shares valued at P271.89 million.

A local brokerage house said speculation of a continuing struggle for control over the power distributor has caused the upward movement in the share prices of Benpres as investors snapped up on the holding firm’s shares to get a much better return rather than directly acquiring Merlaco, which has become too overvalued.

One broker said the market has been swamped with talks that Pangilinan has been accumulating shares of Benpres to solidify the group’s hold in the power retailer.

Another broker said the the spike in Benpres’ share prices was due to speculations that the holding company was close to signing a restructuring agreement with its creditors, a move welcomed by investors who have long been waiting to see the resolution of Benpres’s financial problems.

As of end-May this year, Benpres had trimmed its debt to $330 million and is hoping to reduce it further .

During the company’s annual shareholders’ meeting in June, Benpres president and chief operating officer Angel S. Ong said some creditors have already agreed to a proposal to restructure payments over a period of 12 1/2 years instead of the original 18 years 

Another option is immediate cash settlement on a discounted basis.

He said the company has been able to buy back P501 million and $64 million of its debt at a 40 percent discount, allowing it to further reduce it debt to $330 million from $560 million in 2002.

Oscar M. Lopez, Benpres chairman of Benpres, said the group’s sale of its stake in The Medical City and First Philippine Infrastructure Inc. helped the conglomerate pare down its debt.

Nearly a fourth of the original debt was incurred due to the failed operations of then water unit Maynilad Water Services Inc. In 2006, Maynilad was acquired by the joint venture of Metro Pacific Investments Corp. and DMCI Holdings Inc.

Lopez said the group’s sale of its significant holdings in power utility giant Manila Electric Co. (Meralco) was part of a major reassessment of its investment strategies that “had been made necessary by the economic and political environment.”