Ayalas open to selling stake in Manila Water

MANILA, Philippines — The Ayalas are considering all options for Manila Water Co. Inc. including a possible sale of their stake in the beleaguered company amid President Duterte’s relentless attacks against the east zone water concessionaire, industry sources said.

According to an  insider, there are “ongoing discussions” between Manila Water and Prime Metroline Infrastructure Holdings Corp., owned by ports tycoon Enrique Razon.

The source did not elaborate but said “talks” began late last year when President Duterte started fuming over the P7.4-billion arbitral award.

 Grapevine talk about a possible sale to Razon swirled in the stock market after Manila Water sought a trading suspension yesterday.

Concerned parties declined to comment on whether there is a looming deal between the two groups.

“We have many options to consider. I don’t know which options the board will take,” one source said.

Even Metropolitan Waterworks and Sewerage System chief Patrick Ty said he was  aware of the talks but he had no idea who the interested group was.

He said Manila Water has not disclosed anything yet, but he expects something from them when an agreement is reached.

Another industry source, meanwhile, said Manila Water is having problems in paying its maturing loans.

Manila Water and the Razon Group are not exactly strangers to each other as the two have an existing off take agreement for the development of the Wawa Dam project.

In August last year, Manila Water and the Razon Group inked a raw water supply off take agreement with the MWSS. The deal will be for a term of 30 years and will involve the supply of raw water from the Wawa and Tayabasan rivers.

The first phase will involve the supply of 80 million liters per day (MLD) of raw water by Dec. 31, 2021 while the second phase will involve the supply of an additional 438 MLD of raw water by Dec. 31, 2025.

Manila Water yesterday said its board approved an increase in the firm’s capital stock to P4.4 billion from P3.5 billion.

The board likewise approved a  minimum selling price of P10 per share.

“This move will give flexibility to the company to raise additional capital and funding when needed. Our access to different funding sources will allow us to be deliberate and to take decisive actions as needed. The present circumstances require us to be proactive and ready with different alternatives and options,” Manila Water said.

The capital hike is expected to be presented to Manila Water stockholders for their approval at their annual meeting on April 17.

Sought for comment, Manila Water president Rene Almendras said: “We are in complete control of the situation and our request for suspension is deliberate and thought out properly. We adhere to our governance and transparency standards and will make the appropriate disclosure at the correct time.”

Prior to the suspension, Manila Water closed at P12.16 per share. Its share prices have dropped significantly since December at the height of Duterte’s attacks on businesses.

Amid the water supply shortage that has been affecting Metro Manila, Duterte has taken a tough stance against Manila Water and Maynilad Water Services, the company led by tycoon Manuel V. Pangilinan and the Consunji group’s DMCI Holdings Inc.

Last December, the Singapore tribunal ordered the government to pay Manila Water P7.4 billion and Maynilad P3.4 billion in indemnification supposedly for lost revenue from an unenforced rate hike.

Duterte said he would not honor the Singapore ruling and also moved to cancel the extension of the contract.

Asked how the possible entry of a new investor in Manila Water could impact the negotiations over the water concession agreements, Finance Secretary Carlos Dominguez said “without full disclosure of the reasons for the suspension, it would be very difficult to know what the consequences to the discussions would be.”

“We are confident, however, that the results of the discussions will be beneficial to the customers and the taxpayers,” he said.  – With Mary Grace Padin