White knight makes down payment on Lopez empire

The Lopezes’ white knight has made an initial payment to secure its planned entry into the empire, in a move that could, for better or for worse, see the end of the Lopezes’ control of the conglomerate founded by Don Eugenio Lopez Sr.

The down payment – or is it lock-in money? – has been made, sources said.

The plot twist, however, is that the focus is not just ABS-CBN, contrary to the initial buzz in the grapevine, but on the ultimate parent level, Lopez Inc., the principal holding company of the Lopez Group of Companies that holds the private investments and business interests of the Lopez family within the Lopez Group.

Sources said the Lopezes have agreed in principle to sell their shares in Lopez Inc. and just cash out, perhaps convinced that the political and business environment that paved the way for the meteoric growth of their once formidable empire no longer exists.

Endgame

If this happens, it’s a win-some, lose-some situation of sorts for the Lopezes. It’s a win because they will all get a windfall from the sale of their shares worth billions of pesos, but they will ultimately lose control of their companies.

One scenario, which is the emerging outcome, is that all four Lopez factions will unload and sell their shares.

Another scenario, as reported by Bilyonaryo, is that only the Gabby Lopez-led majority will sell and Piki will be the lone holdout.

Whichever scenario becomes reality, it means the third generation Lopezes have decided, amid their ugly family squabble, to just sell to an outsider.

As I said in previous columns on the Lopez family feud, a sale of their shares was inevitable because on their own, they could not resolve their conflict which has even moved to the courts.

And it’s all because one camp declined to infuse P2 billion into ABS-CBN while the other raised a howl over what it described as poison pills.

Win-win

But a sale at this stage could still be a win-win for both buyer and seller because the sellers could still fetch a good price and the buyer could eventually enjoy a good resale value.

The outsider would have control of most companies in the Lopez Group such as First Philippine Holdings Corp., First Gen Corp., Rockwell Land Corp., as well as ABS-CBN.

Lopez Inc. is owned by the four branches of the Lopez heirs, through each branch’s respective private holding companies, according to documents the Lopez majority earlier submitted in court: Presentacion Lopez-Psinakis branch through Presta Holdings Company Inc. (15.98 percent); Oscar Lopez branch through Croslo Holdings Corp. (29.17 percent); Manuel Lopez branch through Mantes Corp. (29.17 percent) and Geny Lopez branch through Crème Investment Corp. (25.68 percent).

Each of the four branches of heirs has representatives on the board of directors of Lopez Inc. in proportion to its respective stockholdings through Presta, Croslo, Mantes and Crème.

The heirs and their corresponding representatives on the board are as follows:

1) Presta: Lauro Eugenio Panganiban III, Maria Eugenia Brown and the estate of Michael Psinakis.

Presta’s 15.98 percent stock ownership in Lopez Inc. is represented by one seat on the board and is currently held by Maria Eugenia Brown.

2) Croslo: Oscar Lopez Jr., Federico “Piki” Lopez, Benjamin Lopez, Mercedes Lopez-Vargas, Elvira Carmen Lopez-Bautista, Beatrice Eugenia Lopez-Puno, Maria Presentacion Lopez-Abello and Angela Cristina Lopez-Guingona.

Croslo’s 29.17 percent ownership is equivalent to two seats on the board and is currently occupied by Piki Lopez and his brother Benjamin Lopez.

3) Mantes: Manuel Lopez Jr., Miguel Ernest Lopez, Martin Lopez and Maita Lopez-Lichuaco.

Mantes’ 29.17 percent translates to two seats on the board, which are currently occupied by Miguel Ernesto Lopez and Martin Lopez.

4) Crème: Eugenio “Gabby” Lopez III, Regina Paz Lopez, Maria Rosario Lopez, Rafael Lopez, Roberta Pilar Lopez, Ernesto Miguel Lopez and Ramon Javier Lopez.

Crème has a 25.68 percent stock ownership in Lopez Inc. and is represented by two seats on the board currently occupied by Gabby Lopez and his brother Rafael Lopez.

Aside from this, various individual family members from Presta, Croslo, Mantes and Crème hold positions or are involved in other corporations within the Lopez Group.

Negotiations still ongoing

“Negotiations are in flux but are way advanced,” a source said.

The billionaire buyer, sources said, is aggressive and is not risk-averse. As a Filipino business idiom says, “matapang ang pera.”

Nothing official has been announced as I write this piece, and based on my experience as an economic journalist, anything can still happen when it comes to boardroom takeovers – hostile or otherwise – even if money, such as a down payment, has already changed hands.

But I also heard that many of the third generation of Don Eugenio Lopez Sr.’s bloodline have long been wanting to sell their shares and cash out.

If that happens, they can just pack their bags, leave business behind and just jet-set, perhaps to the famed billionaires’ paradise of Monte Carlo, drinking Cristal champagne or a Negroni on hotel terraces overlooking Casino Square.

After all, a series of unfortunate events in the past, bad decisions, skyrocketing debts and an extravagant lifestyle of some Lopez members have already diminished the empire.

Besides, after parting with a crown jewel like Meralco, the Lopezes have long proven true an old business truth: everything can be for sale at the right price.

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