Manila–(PHStocks)–Metro Pacific Investments Corp. (MPIC, PSE: MPI) has announced that Beacon Electric Asset Holdings Inc., a special purpose company jointly owned by MPIC and PLDT Communications and Energy Ventures (PCEV), will sell 112.71 million shares, comprising approximately 10%, in Manila Electric Company (Meralco, PSE: MER), to MPIC at a price of PhP235 per share for an aggregate consideration of PhP26.5 billion.
The consideration payable by MPIC to Beacon will be settled as to PhP1 billion immediately, PhP17 billion in June 2015 and the balance on or before July 2016. MPIC expects to receive a dividend from Beacon at the same time as it settles the July 2016 payment for this transaction. MPIC’s net cash investment in the transaction will therefore be PhP22.2 billion, which MPIC will fund from internal sources following the signing today of PhP25 billion of new 10 year bilateral term-loan facilities.
Upon completion MPIC will own 15% in Meralco directly and through Beacon a further 17.48% thereby taking its effective interest in Meralco to 32.48%; PCEV’s interest in Meralco will be reduced to an effective interest of 17.48%. There will be no change in the aggregate interest of MPIC and Beacon in Meralco which remains at 49.96%.
Jose Ma. K. Lim, CEO of MPIC, commented, “We have previously indicated MPIC’s intention to deleverage Beacon and have concluded the optimum way to achieve this is to acquire more of Meralco from Beacon. The deepening of our investment in Meralco is reflective of our expectation of growth in this business, especially from much needed power generation in Luzon. MPIC retains its partnership with PCEV for the rest of our investment in Meralco.”
As this is a related party transaction, the PLDT and PCEV directors who are also on MPIC’s board took no part in the discussion at the MPIC Board meeting which decided on the purchase and sale. The transaction has also been reviewed by MPIC’s Audit and Risk Management Committee (ARMC) in accordance with MPIC’s ARMC Charter and Code of Corporate Governance.
Meralco is the biggest electricity distributor in the Philippines. PCEV is a holding company whose primary asset is its holding in Meralco, now held indirectly through Beacon, while MPIC is the Philippines’ largest infrastructure investment management and holding company.