FPHC eyes Meralco stake in Rockwell Land

Posted at 05/30/10 11:47 PM

MANILA, Philippines - Lopez-led First Philippine Holdings Corp. (FPHC) is in talks with power distributor Manila Electric Co. (Meralco) for the purchase of an additional stake in Rockwell Land Corp. (RLC), a high-end real-estate developer started over a decade ago.

Manuel V. Pangilinan, who is set to take the post of president and chief executive officer of Meralco by July, said he is open to selling an additional stake in the property developer.

First Holdings owns 49% of Rockwell Land, while the remaining 51% is held by Meralco.

In an interview last week, FPHC chairman and chief executive officer Oscar Lopez said he is looking to consolidate control of RLC under the group’s flagship energy holding company.

“The idea is to get the majority [stake in the property developer]. [RLC] is very much a part of the Lopez group,” the family patriarch said.

In a separate interview, Pangilinan said talks have already started with the FPHC, while indicating that a sale is possible. The businessman failed to discuss financial details and also declined to comment on whether the transaction will involve a portion or the entire RLC stake held by Meralco.

“It’s under discussion. Meralco does not need [RLC]. We want Meralco to focus on power,” he said.

The move is seen to diversify the income stream of FPHC—which derives the bulk of its earnings from power generation subsidiary First Gen Corp.—after selling most of its Meralco shares to Pangilinan-led First Pacific Group starting last year.

These asset sales boosted FPHC’s cash by about 60% to P41.89 billion at the end of the first quarter compared with the same period in 2009 and puts it in a better position for new acquisitions and pay maturing debts.

FPHC still has a 6.6% stake in the power utility which it plans to keep, the elder Lopez said last week. The company also has manufacturing operations through unit First Philec Corp.

Rockwell Land, which in 1995 redeveloped Meralco’s former thermal plant site in Makati City into a high-end community called Rockwell Center, said first-quarter revenues increase by a quarter to P1.02 billion while net income growth was flat at P158 million due to higher expenses.

Condominium sales rose 13.9% to P719 million due to higher revenue recognition from current projects namely Number One Rockwell and Edades Tower and Garden Villas both in Makati as well as The Grove on C-5 Road in Pasig City. The company also owns the Power Plant mall in Makati.

Rockwell Land earlier said it can raise its own funds either through an initial public offering or through the new Real Estate Investment Trust Act apart from internal cash generation.

Joseph Roxas, president and analyst of Eagle Equities Inc., said FPHC’s decision to hike its Rockwell Land stake is beneficial given that the Lopez group already manages the real-estate firm.

“At the right price, it will add value for FPHC. For Meralco, it makes sense since they might have better uses for the money,” Roxas said in a phone interview.

First Holdings in August last year acquired a 24.5% stake in Rockwell Land from affiliate Benpres Holdings Corp. for P1.5 billion bringing its ownership to the present level.


abs-cbnnews.com is the online arm of ABS-CBN Corp.. The firms Meralco, First Philippine Holdings Corp., and Rockwell Land are all part of the Lopez Group of Companies.