The memorandum of agreement, entered into by Vivant Corp. which the Garcias own and Aboitiz Equity Ventures of the Aboitizes, ends the litigation and share wars that have troubled VECO.
The Garcias and Aboitizes agreed that they would share in the management of VECO with the Garcias retaining control of the company’s board.
Every year, there is a rotation of the positions for chairman and vice chairman, but this year, the Garcias are nominating the chairman and the Aboitizes the vice chairman.
The Garcias will also nominate the president, and the Aboitizes the executive vice president and chief operating officer.
The agreement further provides that the board of directors will create an executive committee with five members. Of the five, there will be two co-chairmen with the Garcias and the Aboitizes nominating their respective co-chairman.
While the agreement takes effect on April 2, the parties agreed that prior to that they would finalize shareholders’ cooperation agreements, set up an escrow account and mutually settle all cases with the Court of Appeals.
An escrow account is an account that functions as a neutral third party where the documents and money are deposited.
The friction involving shares between the two families ignited when Hijos de F. Escaño, a holding company owning 51 percent of VECO’s outstanding shares, swapped 30 percent of its controlling block shares in exchange for shares in Vivant, the Garcias’ publicly listed company.
Aboitiz Equity Ventures owns 47 percent of Hijos, and the Garcias 51 percent. AEV owns a total of 54 percent of VECO shares.
To restore the share of Hijos that had been transferred under the swap transaction, the two families decided to enter into a memorandum of agreement such that the sharing scheme would allow a pro rata redistribution of Hijos’ 25 percent shareholdings in VECO to its shareholders.
The sharing scheme is in compliance with the Electric Power Industry Reform Act of 2001.
The ensuing redistribution scheme under the agreement is for the Garcias to control 48 percent of VECO through its direct ownership of 23 percent and Hijos of 25 percent, and the Aboitizes with 43 percent.
Jon Ramon Aboitiz, AEV president and chief executive officer, said he is "happy," while Vivant president Ramontito Garcia said he is "pleased" with the compromise.
Both are looking forward to improve VECO’s performance and service to make it a world-class electric distribution utility Cebuanos can be proud of. — Freeman News Service