Makati—(PHStocks)—Metro Pacific Investments Corp. (MPIC, PSE: MPI) and PLDT Communications and Energy Ventures Inc. (PCEV) have entered into a Sale and Purchase Agreement for MPIC to acquire a further 25% interest in Beacon Electric Asset Holdings, which owns 35% of Manila Electric Co. (MERALCO, PSE: MER) and 56% of Global Business Power Corp., for an aggregate purchase price of PhP26.2 billion. This purchase consideration is to be settled as to PhP17 billion in cash and the balance of PhP9 billion over the next four years.
Upon completion MPIC will continue to own a direct 15% interest in MERALCO and, through its 75% interest in Beacon Electric, a further 26.2%—thereby taking its effective ownership interest in MERALCO to 41.2% and in Global Power to 42% directly and about 9.1% indirectly (through MERALCO). PCEV’s interest in MERALCO will be reduced to an effective interest of 8.7%.
There will be no change in the aggregate interest of MPIC, PCEV and Beacon in MERALCO which remains at 49.96%.
Jose Ma. K. Lim, CEO of MPIC, comments, “Following my statement of last Friday that we were in active discussions with PLDT in this respect I am delighted to confirm that we were able to reach agreement on purchase price and terms during the weekend. I believe this investment represents good value for MPIC in light of the long-term growth outlook of the Philippine power sector. You will recall that last year we substantially reduced the leverage in Beacon. MERALCO is now the single largest source of cash generation for MPIC and in undertaking this investment, we have enhanced our overall cash flow and further improved our growth prospects.”
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 Committee, in accordance with MPIC’s internal policies.
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. MPIC is the Philippines’ largest infrastructure investment management and holding company.
Global Power is the leading power supplier in Visayas with 852MW of coal and diesel powered generating capacity at present (including 150MW to commence operations later this year) and 670MW for further expansion. This development project is a 670MW super critical coal fired plant in La Union, Pangasinan (with 600MW EPPA signed with MERALCO).