Lopez Holdings sees steady growth of businesses in 2011

MANILA, Philippines - Lopez Holdings Inc. expects 2011 to be a good year with the expected steady growth of its media and communication and power generation businesses as well as the clean-up of its balance sheet aimed at fully eliminating deficit.

In an interview with reporters following the company’s special shareholders meeting yesterday, president and chief operating officer Salvador Tirona said the group is looking to wipe out its deficit this year and remains open to the restructuring of its remaining $65 million debt.

“This remaining debt is open to restructuring or buyback. This depends on debtholders, which are mostly individual bondholders,” Tirona said.

From $520 million seven years ago, the company has significantly trimmed its debt through the sale of some assets.

Lopez Holdings (formerly known as Benpres Holdings Corp). had undergone a quasi-organization aimed at slashing its capital deficit by P6.7 billion. The company started accumulating the deficit in 2002 at P867 million and shot up to as much as P9.634 billion in 2004.

“The quasi-reorganization is done. We have yet to fully wipe out the deficit. As of December, the parent company still had about P100 million in loss (negative retained earnings). Hopefully, with the first quarter results positive, the remaining P100 million deficit will be wiped out,” Tirona said.

“I think the major businesses have a good prospect for performance this year. Everything is on track per their plans. It’s going to be a good year,” Tirona said.

Unit ABS-CBN Corp., the country’s largest multimedia content provider, is set to expand to the digital platform as it competes head on with perennial rival GMA Network. It is looking to spend from P3 billion to P5 billion tops on a nationwide rollout of digital TV, which is designed to deliver improved image and sound quality and more programming options to viewers, thereby boosting its ratings.

Another investee, First Philippine Holdings Corp., a minority shareholder in power utility Meralco, is the parent company of leading clean and renewable energy advocate First Gen Corp., which in turn controls geothermal energy pioneer Energy Development Corp.

After an “eight-year journey out of debt restructuring,” Lopez Holdings is ready to implement an Employees Stock Option Plan (ESOP) and Employee Stock Purchase Plan (ESPP), said Manuel M. Lopez, chairman and chief executive of Meralco.

“In today’s competitive marketplace, where corporations are vying for scarce resources, including the best talent that can help them navigate the future, Lopez Holdings must ensure that it is sufficiently manned and equipped to move forward and succeed. Institutional knowledge can be built using such long-term incentive plans as the ESOP and ESPP,” Lopez said.

Lopez said the ESOP and ESPP, which places the company at par with best practices in corporate governance, entitles shareholders to acquire shares of the company at a discount of 15 percent from the 10-day average closing price from Dec. 23, 2010 to Jan. 10, 2011.

“Continuous organizational learning is facilitated as people look to their future with a company that values their contribution beyond lip service, and with shareholders who place confidence in their skill and judgment,” Lopez said.