Lopez Group readies bid for Meralco

PHILIPPINE NEWS SERVICE — The Lopez Group is looking at a combination of strategic partnerships, equity and loans to raise $500 million to bid for the government’s combined stake in Manila Electric Co., the country’s biggest power distributor.

Meralco chairman Manuel Lopez told reporters after the company’s annual stockholders’ meeting yesterday that the amount would enable the Lopez Group to acquire government’s 29 percent stake in Meralco, valued at around P26.82 billion. The government owns about 290 million Meralco shares.

“We are eyeing whatever stake is put on the auction block. Whether it’s the republic of the Philippines or the one’s held by GFIs [government financial institutions] . Definitely we will be bidding for it,” Lopez said.

The Government Service Insurance System, Social Security System and the Land Bank of the Philippines own a combined 29 percent of Meralco.

“[Financing] is going to be a combination of strategic partnerships, equity and loans. We will possibly use First Holdings as a vehicle but it depends on the partners on how they want to program it,” Lopez said.

He said talks were ongoing with prospective partners interested in bidding for the shares.

“We are currently holding discussions with some potential partners,” Lopez said.

He said he was hoping Union Fenosa, Spain’s gas and electricity company which holds a 9 percent stake in Meralco, would support the Lopez Group in its bid.

“We hope they would remain with us. We have very good relationship with them,” Lopez said.

The Lopez Group and First Philippine Holdings Corp. own about 17 percent of Meralco, with the remaining shares held by the public and other investors.

Meralco, meanwhile, said it was bullish on its prospects this year.

Meralco president Jesus Francisco in a presentation to stockholders said energy sales were projected to rise by 2.5 percent this year from 1.1 percent growth in 2006.

Meralco expects the commercial sector to lead the growth at 3.8 percent; industrial, 2.5 percent; and residential with 1.1 percent, or an overall growth of 2.5 percent.

Meralco based its optimism on the favorable ruling of the Supreme Court on its unbundling case in December.

The ruling, coupled with savings from the payment of foreign-denominated loans, is expected to give a big boost to the company’s financial performance this year.