MPIC buys additional Beacon Electric stake for P26.2 B

MANILA, Philippines - Metro Pacific Investments Corp. (MPIC), the infrastructure and tollways conglomerate, is acquiring from PLDT Communications and Energy Ventures Inc. (PCEV) the common and preferred shares of stock in Beacon Electric Asset Holdings Inc. for P26.2 billion.

This comes after MPIC and George Ty-owned GT Capital Holdings Inc. entered into a strategic alliance last week that paves the way for MPIC’s acquisition of a 56 percent stake in GT Capital’s Global Business Power Inc. through MPIC affiliate Beacon Electric.

As a result of the share sale agreement between MPIC and PLDT, MPIC will acquire a further 25 percent interest in Beacon Electric, which owns 35 percent of Manila Electric Co. (Meralco) and 56 percent of Global Business Power Corp.

The P26.2 billion will be settled through a cash payment of P17 billion and the balance of P9 billion to be paid in the next four years.

Under the sale and purchase agreement, MPIC will acquire from PCEV 645.7 million common shares constituting 25 percent of the outstanding common shares of Beacon Electric and 458.3 million preferred shares constituting 25 percent of the total economic rights on the outstanding preferred shares of Beacon Electric.

 “Upon completion, MPIC will continue to own a direct 15 percent interest in Meralco and through its 75 percent interest in Beacon Electric, a further 26.2 percent – thereby taking its effective ownership interest in Meralco to 41.2 percent and in Global Power to 42 percent directly and about 9.1 percent indirectly (through Meralco),” MPIC said.

In turn, PCEV’s interest in the power distributor will be reduced to an effective interest of 8.7 percent. There will be no change in the aggregate interest of MPIC, PCEV and Beacon in Meralco which remains at 49.96 percent.

Commenting on the transaction, MPIC president and CEO Jose Ma. Lim said: “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.”

As a result, Lim added, Meralco is now the single largest source of cash generation for MPIC.

 “In undertaking this investment, we have enhanced our overall cash flow and further improved our growth prospects,” Lim said.

PCEV is a holding company whose primary asset is its holding in Meralco, the country’s biggest power distributor.

Global Power, meanwhile, is the leading power supplier in Visayas with 852 MW of coal and diesel powered generating capacity at present. It is now 56 percent owned by MPIC affiliate Beacon Electric after MPIC and GT Capital Holdings Inc. entered into a strategic alliance last week.