To fund purchase of Meralco shares JG Summit to raise P50 B via loans, bonds

MANILA, Philippines - Listed holding firm JG Summit Holdings Inc., the flagship firm of tycoon John Gokongwei, is set to raise P50 billion to fund the acquisition of a stake in utility giant Manila Electric Co. (Meralco).

JG Summit president and chief operating officer Lance Gokongwei said the holding firm is raising the amount through a combination of bank loans and bond issuances.

Gokongwei said the amount to be raised would fund about two-thirds of the P72-billion acquisition price of the 27-percent interest of diversified conglomerate San Miguel Corp. in Meralco.

He pointed out that details of the planned fund raising activities including the share of bank loans and bond issuances are still being finalized.

According to Gokongwei, one-third of the total acquisition price would be funded through equity as the flagship firm has an existing cash of $500 million. “JG Summit has a cash on hand of $500 million.”

Last week, JG Summit raised close to P12 billion by unloading a portion of its stake in snacks leader Universal Robina Corp. (URC).

Meralco is majority controlled by the group of businessman Manuel V. Pangilinan that partnered with the Lopez family to secure a controlling block in Meralco.

SMC decided to sell its minority stake in utility giant Meralco to the Gokongwei family marking its exit from the power distribution giant just five years since it bought the bulk of its shares.

Proceeds from the sale would finance the conglomerate’s various investment opportunities like infrastructure projects and oil and gas acquisitions.

In October 2008, SMC bought the Government Service Insurance System’s 300.963 million Meralco common shares at P90 apiece.

In 2011, telecommunications giant Philippine Long Distance Telephone Co. acquired Sun Cellular operator Digital Telecommunications Philippines, Inc. of the Gokongwei family through a            P69.2-billion share-swap deal.

For infrastructure projects, JG Summit and Pangilinan-led Metro Pacific Investments Corp. earlier formed a joint venture to bid for the expansion and operation of the P17.5-billion Mactan Cebu international airport project.

Aside from Meralco, Gokongwei said the holding firm is on the look out for other possible investment opportunities.