Performancing Metrics

Metro Pacific to buy out French partner in Maynilad

Written by Likha Cuevas-Miel, Manila Times Tuesday, 23 December 2008 05:33

METRO Pacific Investments Corp. (MPIC) announced on Monday that it would buy out the unit of Suez S.A. of France in Maynilad Water Services Inc. through a share swap deal.

In a disclosure to the Philippine Stock Exchange, MPIC said it has agreed in principle to issue 791.1 million common shares to Lyonnaise Asia Water (Holdings) Pte Ltd. (LAWL) by way of private placement. These shares, priced at P2.57 each or a total of P2.03 billion, are equivalent to 7.75 percent of the fully diluted share capital of MPIC.

The shares to be issued to LAWL would come from the increase in its authorized capital stock and new shares, excluding the ones allocated for an employee stock option plan, if there would be any. The transaction will close on June 30, 2009 and the new shares will be listed at the local bourse.

After this, LAWL will be the second biggest owner of MPIC, next to Metro Pacific Holdings Inc. The public holds the remaining 1.9 percent.

LAWL then would sell 236,000 Class B Maynilad common shares with par value of P1,000 each or an aggregate price of P2.03 billion to MPIC. The two related transactions are “subject to the fulfillment of certain closing conditions,” including the execution of a definitive deed of absolute sale of shares, formal approval by the LAWL board, and confirmation from the government that the foreign firm is exempted from certain Philippine taxes.

With the share swap, MPIC will acquire all the rights, title, interests of LAWL in and to the Maynilad Class B shares “in line with its objective to consolidate and support its utilities/infrastructure interests” in the West Zone concessionaire, the disclosure read.

These transactions will jack up MPIC’s stake to 56.8 percent, which consists of its current 51 percent indirect interest through the DMCI-MPIC Water Co. Inc. and the additional 5.8 direct stakes from LAWL.

MPIC is the local unit of Hong Kong-listed First Pacific Co. Ltd., which also controls Philippine Long Distance Telephone Co.

In the first nine months of this year, MPIC posted a core net income of P143.3 million, erasing the net loss of P170.6-million incurred a year ago.

Its net income including nonrecurring gains reached P660 million, an improvement from last year’s restated net loss of P218.4 million which reflected the impact of the service concession arrangements on Maynilad.

For the first three quarters, Maynilad’s core net income stood at P1.75 billion, P735.6 million of which went to MPIC representing its equity interest, which was 75- percent higher than last year.