MVP eyes Tanco's 4% stake in Meralco

MANILA, Philippines - Beacon Electric Asset Holdings Inc., the holding company for the shares of Metro Pacific Investments Corp. (MPIC) and Pilipino Telephone Corp. (Piltel) in Manila Electric Co. (Meralco), is interested in acquiring additional shares in the power distribution utility.

In particular, the group is eyeing the four percent Meralco stake of businessman Eusebio Tanco, owner of Asian Terminals Inc. (ATI) and computer school Systems Technology Institute (STI).

MPIC and Piltel chairman Manuel V. Pangilinan, who also chairs Beacon, revealed they are interested in acquiring Tanco’s stake in Meralco, a move that would fortify their hold on the power utility.

PhilPlans (formerly Philam Plans), one of the major assets insurance giant Philamlife sold last year, acquired the four percent stake of the Government Service Insurance System (GSIS) in Meralco earlier this year. Philam Plans was bought by Philippines First Insurance Company Inc. of the Tanco Group and STI.

PhilPlans president Monico Jacob has said that their company is open to selling its stake in Meralco.

The Pangilinan Group currently has a 34.7-percent stake in Meralco held by MPIC (14.7 percent) and Piltel (20 percent). It will raise this to 41.4 percent once it exercises a call option

MPIC earlier signed an agreement with Piltel to consolidate their respective 163.6 million and 154.2 million common shares in Meralco into Beacon Electric Asset Holding Inc., making the latter the single-largest shareholder of Meralco. MPIC assigned its call option right over 74.7 million shares of Meralco to Beacon.

The exercise of a call option with Lopez-led First Philippine Holdings Corp. consisting of a 6.6-percent stake in Meralco for P22.4 billion until May 15 this year will increase Beacon’s Meralco shareholdings from 28.2 percent to 34.8 percent, which will result in a combined shareholdings of Beacon Electric and Piltel of 40.9 percent. Piltel excluded part, or 6.1 percent, of its original Meralco holdings from their consolidation into Beacon.

If the call option is exercised, the Lopez Group will be left with one board seat in Meralco.

MPIC and Piltel explained that the consolidation of their holdings in Meralco will also allow Beacon to access debt financing for any additional purchases of shares, using its shares as security. Beacon will be equally owned by the two firms.

A syndicate of banks has offered a credit line of P18 billion over 10 years to Beacon, MPIC president Jose Ma. Lim has disclosed.

“Both Metro Pacific and Piltel consider their Meralco stakes as a strategic investment and their consolidation in Beacon allows them to strengthen their ownership and maximize returns over the long term,” Pangilinan was earlier quoted as saying.

The companies also said Hong Kong-based parent First Pacific Co. had agreed to subscribe to P6.6 billion of MPIC’s three-year convertible bonds to partially fund its subscription of Beacon shares.