| THE Lopez family would definitely bid for the entire 29-percent stake of the government in the country’s largest power utility Manila Electric Co. (Meralco). The equity is up for sale in the next quarter.
“Whatever is put on the auction block, whether it is the stake of the Republic of the Philippines or the government financial institutions, certainly we will be bidding for it,” said Meralco chairman and chief executive Manuel M. Lopez in an interview Tuesday.
The Lopez group currently holds around 30 percent equity in Meralco. Should it succeed in acquiring the state-owned shares, the group would effectively control the power distribution concern.
The government shares in Meralco number around 290 million shares. Meralco shares closed up P1 to P92.50 apiece Tuesday.
“We are ready for it,” said Lopez, adding that the group will most likely form strategic partnerships with companies as well as infuse equity and take out loans to raise the fund for the acquisition.
He said their group has started exploratory talks with potential partners but have yet to finalize any agreement. A possible strategic partner could be First Philippine Holdings Corp., Lopez added.
Government officials earlier said several foreign and local groups were keen on acquiring a stake in Meralco. The power utility has a market capitalization of P54.76 billion.
At the end of the first quarter, Meralco’s net profit amounted to P532 million, a turnaround from a loss of P748 million a year earlier. Provision for probable losses was stopped starting January 2007 with the favorable Supreme Court decision on the unbundling rate case last December.
Had there been no provisions made for probable losses amounting to P1.43 billion in the first quarter of 2006, net income for that period would have been P179 million. Compared to that level, net income this year would still be higher by 197 percent.
The 3.7 percent rise in energy sales from January to March this year also contributed to the growth in bottom line as well as the 49.1 percent decrease in unrecoverable purchased power to P494.46 million.
On the robust electricity volume growth of 3.7 percent, revenues for the period grew 15.8 percent from P41.61 billion last year to P48.20 billion this year.
In another development, Lopez said Meralco management is pushing for the redevelopment of parts of the Meralco compound in Ortigas to maximize the value creation of its property assets.
Starting this year, the compound will be home to The Strip, a moderately-sized commercial area featuring prominent retailers. Adjacent to this is the three mid-rise buildings for lease to business process
outsourcing.
By the end of 2008, locators are expected to move into the first two of three towers. The compound will also house residential projects.
As property owner, Meralco will not spend a single-centavo on these developments as funding will be shouldered by partner Rockwell Land Corp., Lopez said
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